Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — ENVIRONMENT, TRANSPORT AND THE REGIONS

The Secretary of State was asked—

Oral Answers to Questions — Local Government Finance

Mr. Miller: If he will make a statement on his review of the mechanism of local government finance. [19393]

The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): We announced the review of local government finance in July, taking forward our manifesto commitments, in close collaboration with local government, business and other representative organisations. We shall shortly consult more widely on possible changes and set out our proposals on local government in a White Paper next spring.

Mr. Miller: I thank my right hon. Friend for that reply and assure him that the long-overdue review of local government finance is widely welcomed in my constituency. When progressing towards greater localisation of the business rate, will he take into account the views of the business community?

Mr. Prescott: Yes, I can reassure my hon. Friend on that point. He will recall that, in our manifesto, we said that there were sound reasons why domestic rates should be decided locally. Any system must command the support of the business community, which is why we are consulting both the business community and local authorities about how we shall achieve that.

Mr. Yeo: As this year's local government financial settlement was clearly designed to penalise certain inner-London boroughs, as well as councils that serve rural areas and those that have prudently repaid their debt, will the Secretary of State now confirm that the aim of his review is simply to give more cash to Labour councils, no matter how incompetent or corrupt they may be?

Mr. Prescott: No, I cannot accept the conclusion drawn by the hon. Gentleman. The purpose of this Government is to be fair in determining local authority financing, and we spelt out precisely how that was so in

the recent settlement which we brought to the House. I am bound to say that most local authorities have accepted our conclusions.

Mr. Barnes: There were two great Tory fiddles over local government finance when they were in government. One was the area cost adjustment and the weighting given to that figure to top-slice sums from shire counties. The other, affecting district councils in particular, was the enhanced population figures. Those meant that places such as Westminster and certain seaside resorts received excessive sums because of the people who moved into those areas; whereas areas such as north-east Derbyshire, where people had moved away for work purposes, lost out considerably. Will those matters be taken into account in the forthcoming review? I hope so.

Mr. Prescott: I can reassure my hon. Friend that that is precisely what we shall do. As I recall, during the statement on local authority financing, he mentioned a different sort of formula, which we are quite prepared to discuss with him during the review, and we await his contacting us.

Oral Answers to Questions — New Housing (Essex)

Mr. Jenkin: What representations he has received on the need for new housing in rural Essex. [19394]

The Minister for the Regions, Regeneration and Planning (Mr. Richard Caborn): The Secretary of State has received representations from the hon. Gentleman and the hon. Member for Colchester (Mr. Russell). Officials in the Government office for the east region hold frequent discussions with local authorities and other bodies on housing and planning issues in Essex.

Mr. Jenkin: Will the hon. Gentleman consider that an extra 45,000 houses in a handful of parliamentary constituencies that are predominantly rural represents an unwarranted intrusion of urban building into the rural area? With our roads already clogged with traffic and severe water shortages, is not what is required completely new thinking on how to deal with housing demand in the south-east, rather than sprawling estates destroying communities and our countryside?

Mr. Caborn: I am sure that the hon. Gentleman will agree that that has not happened in the past seven months and that some of the problems existed during the previous Administration. More important, the county council's proposals for the scale and distribution of new houses in Essex will be the subject of full public scrutiny. It is not central Government who determine those matters—they are determined at regional and local level.

Mr. Bob Russell: Will the Minister accept that Essex already has one of the highest housing densities in the country, and that the projections for the next 10 to 15 years show that that density will grow more than that of any other county, apart from Devon? Does he therefore agree that we should look to regional distribution of new housing and concentrate on urban renewal and brown-field site development, instead of continually going for green-field sites in the towns as well as the countryside?

Mr. Caborn: The Government subscribe to that general point of view, and we are working hard to achieve


those objectives. The previous Administration issued a consultation paper, and we are reflecting on the 700 responses to it. The Government will make our position clear early in the new year.

Oral Answers to Questions — Local Government Finance

Mr. Greenway: What estimate he has made of the likely levels of council tax bills in shire districts in 1998–99. [19395]

The Minister for Local Government and Housing (Ms Hilary Armstrong): For the first time in four years, we have increased provision for services delivered by shire districts. I cannot predict the actual council tax levels for shire districts in 1998–99, as those will depend on the spending decisions of individual local authorities.

Mr. Greenway: Why are the Government robbing rural areas? Does the Minister realise that, if the North Yorkshire county council is to meet the Government's target for school budgets, it will be forced to spend not to standard spending assessment but to the cap limit'? That will involve a 14 per cent. increase in council tax. Does that not show that the Government's claim to have funded the schools spending increase is a complete sham; and will not voters blame the Government when they get a council tax rise of four times the rate of inflation?

Ms Armstrong: This year, for, the first time, the additional money is being directly funded by central Government and has gone to every education authority. Ultimately, those decisions are local ones. It is at local level that councils will decide what quality of services they are prepared to provide for the amount that local people are prepared to pay. By contrast with last year, the additional spending on education has been provided by Government grant to local authorities.

Mr. Ronnie Campbell: Is the Minister aware that the shire of Northumberland faces an 18 per cent. Increase—which is even worse than what the Tories gave us for 18 years? Is the Minister prepared to meet a delegation from the shire county council to discuss those matters?

Ms Armstrong: Of course I shall—or at least I shall have a meeting with all authorities that want one. We are encouraging many of them to save council tax payers' money by holding their meetings via video conferencing. That is better than making the time-consuming and costly journey to London from Northumberland.
I can assure the House that we shall hold proper discussions with authorities. I remind my hon. Friend that the money for education, including Northumberland's, has been funded directly by central Government. The previous Administration, in their spending targets for this year, included a redistribution from central to local government that would have meant an increase of 7 per cent. in council tax—but the actual amount is up to each local authority.

Sir Norman Fowler: The Minister cannot shuffle off responsibility, not even by videolink. Will she accept that the Government's settlement has discriminated against shire districts? The result will be that council tax bills will average over 10 per cent., with some councils forced to

go even higher—as the hon. Member for Blyth Valley (Mr. Campbell) has just pointed out. Does that not go back on Labour's promise to be fair to the shire areas?

Ms Armstrong: The shire districts have been treated more generously this year than for the previous four years, so I shall take no lessons on that from those on the Conservative Benches. I remind the right hon. Gentleman of what the Conservative party said to its members last year. In a question and answer programme, it was asked:
Is Labour right to claim that the Chancellor is paying for national tax cuts by increasing local taxes?
The Conservative research department answered:
No. The Chancellor does not set local taxes: that is a job for local authorities. For its part, the Government has provided a fair settlement.
This year, an even fairer and more generous settlement has been provided. [Interruption.] The right hon. Gentleman shouts and cries, but he knows that the previous Government delivered a poor deal for local government and we are trying, in seven months, to put right the poverty of 18 years.

Mr. Tipping: Did not the previous Government have a deliberate policy of transferring responsibility for council tax from central Government grants to local council tax payers? Will the Minister confirm that the previous Government predicted council tax increases of 7 to 8 per cent?

Ms Armstrong: My hon. Friend is absolutely right. Moreover, the additional money that the Government have put into education this year is equivalent to £50 protection per council tax payer, because it comes directly from central Government and the burden is not being put on council tax payers.

Oral Answers to Questions — Kyoto Conference

Mr. Brake: If he will make a statement on the outcome of the climate change conference in Kyoto. [19396]

Mr. Bayley: If he will make a statement about Government policy on climate change. [19402]

Mr. Prescott: The Government are committed to tackling the threat of climate change, and the role that we played in securing a deal in Kyoto demonstrated that to the world. I shall make a statement to the House on the outcome of the Kyoto conference after these questions.

Mr. Brake: I welcome the fact that a statement will be made later today. However, will the Deputy Prime Minister explain how the appointment of Keith Taylor of Esso—who is on record as being extremely dismissive about global warming—to the Government's cleaner vehicles task force will help the Government achieve their 20 per cent. reduction target?

Mr. Prescott: I do not know enough about the individual referred to, but, before the Kyoto conference, we met business men at a summit at No. 10, and they made it absolutely clear that they supported the Government's objectives, wanted to talk to us after


the Kyoto agreement, and believed that, if the Government could provide leadership, they would be prepared to follow a practical policy. That is precisely what we are doing and together we shall achieve the objectives that we agreed in Kyoto.

Mr. Bayley: I pay tribute to the Deputy Prime Minister's shuttle diplomacy, without which there would have been no agreement whatever at the Kyoto conference. Does my right hon. Friend agree that rich countries such as Britain face a simple choice: pay now to cut greenhouse gas emissions; or pay later to clear up the mess of flooding in coastal areas and crop failures? Will he give the House a clear assurance that, even though other countries have not signed up to our ambitious target of a 20 per cent. reduction in greenhouse gas emissions, the Labour Government will stick to that target?

Mr. Prescott: I am grateful for my hon. Friend's kind remarks. I shall wait for the statement to give the details to the House, but let me just say that it is not all about pain; it is about gain, making things an awful lot more efficient and making people's quality of life much better. My hon. Friend must bear in mind the fact that the developed countries produce more than 50 per cent. of greenhouse gases, and Kyoto was about making the first down payment on their contribution. It was a successful formula.

Sir Sydney Chapman: I recognise and welcome the Government's commitment to cut emissions by 20 per cent., based on 1990 figures, by 2010. Does the right hon. Gentleman agree that he should come clean in another sense and tell the House precisely what additional measures he will take to ensure that that objective is reached? If he cannot do that now, will he mention it in his statement?

Mr. Prescott: Yes, I shall refer to the matter in the statement later.

Oral Answers to Questions — Local Government Finance

Jane Griffiths: What representations he has received in response to the changes in economic and social needs indices announced in the 1998–99 local government settlement. [19397]

Ms Armstrong: We have received a number of representations from local authorities and others in response to the changes in the economic and social needs indices announced in the provisional 1998–99 local government finance settlement.

Jane Griffiths: Does my hon. Friend agree that, following this year's local government settlement, the two very different shire district authorities that form part of my constituency of Reading, East—urban, Labour-controlled Reading, which has a number of social need and deprivation indicators, and suburban and semi-rural Wokingham, which has few—[HON. MEMBERS: "Reading."]—not reading—have received help with the difficult and costly transition to unitary authority status?

Ms Armstrong: I thank my hon. Friend for that question. I know that different authorities have very

different needs, and it is right that those needs should be properly reflected when we consider the allocation of money to those authorities. The economic and social indices used by the previous Administration were believed and trusted by no one. We have tackled that as an important part of achieving fairness this year, as can be seen in the results for Wokingham and Reading.

Mr. Boswell: Will the Minister bear in mind the need for eventual changes in the area cost adjustment, in the light of the Elliot report? Does she accept that, although we may generously allow her and the new Government a year to review the situation, by this time next year counties that do not benefit from that adjustment, such as Northamptonshire, will be looking for action?

Ms Armstrong: I am pleased that the hon. Gentleman will allow me at least one year. He was prepared to allow his Government a lot longer—I know that they struggled with the area cost adjustment for every year that I have been in the House. The hon. Gentleman will know that I have announced further research into the area cost adjustment, and we shall return to the matter next year.

Mr. Bill O'Brien: I thank my hon. Friend for the Government's generous contribution to local government in the form of education funding. Will she take note of the fact that local government care for the elderly still faces substantial need? In view of the new challenges confronting local government in looking after the elderly, when she considers the formula for 1998–99, will she give special consideration to the social needs facing many local authorities, especially my local authority, Wakefield?

Ms Armstrong: The settlement this year included a final transitional amount of £350 million for community care. Also, this year we changed the SSA for social services for the elderly. I recognised, as did my right hon. Friend the Deputy Prime Minister when he made the statement, that, although we had got a better and fairer settlement, it was a tough settlement for local government. It will take us some time to begin to catch up on the 18 years of deficit.

Mr. Lansley: When he plans to meet representatives of the Local Government Association to discuss the 1998–99 settlement. [19400]

Ms Armstrong: I am currently planning to meet them on Wednesday 14 January.

Mr. Lansley: When the Minister meets the Local Government Association, will she explain why, when the Deputy Prime Minister said that the purpose of his statement was fairness, the Government proceeded with the rampant unfairness of not implementing the changes to the area cost adjustment that were promised by the Prime Minister to the Cambridge Evening News in April this year before the election? Cambridgeshire has the lowest SSA per head of any shire county, and the failure to implement the review means that Cambridgeshire is not properly compensated for the cost of providing services.

Ms Armstrong: As I have already said this afternoon, there has been less agreement about, and less support across local government for, area cost adjustment than any


other single issue. My right hon. Friend the Deputy Prime Minister has tried to make changes this year that can be upheld properly and credibly. Those changes have general support across local government—even if individual authorities have not benefited from them.
There is no consensus or agreement regarding the area cost adjustment and the Elliot review, and we are not able to achieve that at present. Therefore, we have commissioned additional research into actual costs and we shall examine that matter, together with all other suggestions, with local government next year. We gave a commitment that we shall examine whatever changes are proposed, but those changes must be robust and must stand the test of time.

Mr. Hoyle: Can the Minister explain the concept of fairness, as Chorley is the only council in the north-west that has suffered the double blow of reductions in SSA and in revenue support grant? Could there have been a mistake? Will the Minister hold an urgent meeting with the local authority—around the table and not by video link?

Ms Armstrong: Any change always means that there are winners and, unfortunately, losers. I predicted that outcome before the settlement: it was bound to happen. I shall, of course, be happy to meet Chorley council. I am simply trying to make life easier for it and for council tax payers by suggesting a simpler method. However, we want to ensure that every authority is treated fairly within a formula and a set of formulae that achieve general agreement across local government and in this place.

Mr. Burstow: When the Minister meets the Local Government Association in January, will she take the opportunity to reassure it that the Government have no plans to ask local authorities to provide services to disabled people while scrapping the disability living allowance to pay for that?

Ms Armstrong: The hon. Gentleman knows that he is pushing his luck: Social Security questions were yesterday. I assume that he missed being called then. We are of course keen to work with local government and to discuss a wide range of topics with it. I am sure that the Local Government Association will bring many matters before me on 14.January.

Mr. MacShane: In her meetings with the Local Government Association, will the Minister assure the House that she will convey a message of partnership and of respect for the work of our 12,000-odd local councillors? Such an approach would be in stark contrast to that of the Conservatives, who, for 18 years, patronised, derided and sneered at them, and treated them as the enemy within. Services provided locally are a vital part of the community, and everyone—certainly those in my constituency of Rotherham—is delighted to see a Minister finally treating local government as an equal partner.

Ms Armstrong: We meet local government representatives on a regular basis because we believe that local government is a legitimate and proper democratic tier of government. It ill behoves hon. Members in this place to criticise the behaviour and activities of those at

another level of government. It is important for all who believe in democracy to support local government and achieve the best service at local, as well as central, level.

Sir Norman Fowler: If the Minister believes that, will she accept that, in addition to the other costs imposed by the Government, the Chancellor's pension tax is currently costing local authorities £300 million a year? Why will the Government not tell local authorities who will bear that cost?

Ms Armstrong: I am sorry that the right hon. Gentleman obviously has not been able to keep up with the level of on-going negotiations between central and local government. The Local Government Association is currently conducting a survey to establish what the precise cost will be. [Interruption.] There is no point seeking to guess the survey's findings when they have not yet been delivered. No one in local government has yet formulated the cost. We have agreed that when that cost is known and when we are aware of the actuarial costs of the revaluation, those factors will be taken into account next year during the settlement process.

Mr. Watts: Will my hon. Friend accept my congratulations on the improvements that have been made to the standard spending assessment system this year? Will she accept also that the people of St. Helens will be laughing in the aisles to hear Conservative Members talk about fairness when their Government introduced a system that meant that Westminster, which has the same population as St. Helens, received far more grant than St. Helens? If St. Helens had received the same level of grant as Westminster, no council tax would have been levied. Indeed, we would have been able to give a £1,000 rebate to every member of the St. Helens community.

Ms Armstrong: As I have already said, the changes that we have made in the SSA this year were arrived at after full consultation with local government during the summer. It was widely accepted that changes in the economic and financial indices and those related to commuters and visitors would make the system much fairer. I accept that there is still more work to be done, but I thank my hon. Friend for his recognition that this year's settlement is much fairer and better than those arrived at in previous years.

Oral Answers to Questions — Decentralisation

Mr. Charles Kennedy: If he will make a statement on progress towards decentralisation of government within England. [19401]

Mr. Caborn: On 3 December, we published our White Paper entitled "Building Partnerships for Prosperity", which outlined our proposals for regional development agencies. We see RDAs as the first step on the way to establishing greater decentralisation of government within England.

Mr. Kennedy: As part of the regional development agencies strategy, will the Minister revisit and reconsider the future role, remit and, most important of all, the budget of the Rural Development Commission? There is a profound sense of anxiety throughout rural England


especially that, effectively, the commission is being dismantled by the Government. It is feared that the budget will not be transferred fully towards the sort of projects that benefit particularly the west country, Yorkshire and elsewhere, as under the present arrangements.
It must be said that the attitude adopted by the Deputy Prime Minister when he introduced the White Paper offered no reassurance. Will the Government revisit this issue? There is a profound sense in rural Britain that we have an urban Government with urban attitudes, who are not sensitive to the interests of rural Britain.

Mr. Caborn: First, it is unfortunate that, obviously, the hon. Gentleman has not read the White Paper and the Bill. Secondly, I do not know where he is obtaining his information. I say that in response to the White Paper on rural communities. Furthermore, my right hon. Friend the Deputy Prime Minister has announced that we are bringing forward a comprehensive spending review of the rural areas. Discussion is starting, and that will give reassurance to the rural communities that they will have a far better deal than they would have received under the fragmented arrangements that were operating over the past decade or more.

Mr. Blizzard: Will my hon. Friend give guidance and direction to regional development agencies so that they might address disparities within regions? For example, East Anglia is often seen as a relatively prosperous region, yet, within it, especially Lowestoft in my constituency, there are high and sustained levels of unemployment. There are levels of deprivation that have been described by the director of public health as being comparable to those of inner cities. There are large areas of derelict industrial land which are in need of regeneration. Will my hon. Friend ask regional development agencies to take up those problems?

Mr. Caborn: My hon. Friend knows that the object of the exercise is to decentralise power from the centre down to the regions. We have made it clear that decentralisation must take place also within the regions. Overheating of some parts of the economy and under-utilisation in other parts is unacceptable and is an economic model that was left by the previous Administration. The result was that only two of the 10 English regions achieved the European average of gross domestic product per capita. Only two regions marginally reached the average. By definition, eight regions were well behind. Cornwall achieved only 69 per cent. of GDP per capita. That is the legacy of the past 18 years of Tory government.

Mr. Townend: Does the Minister accept that where I come from—East Yorkshire—there is no demand for another tier of government, no demand for a regional assembly and no demand for the extra bureaucrats and politicians who will have to be paid for by the taxpayer? The people of East Yorkshire do not want to be run from Leeds or, even worse, from Manchester.

Mr. Caborn: I suggest that the hon. Gentleman goes back and discusses it with some of his colleagues in the Conservative party in the north, because they are very active members of the Yorkshire assembly. Led by the Conservatives, and with the Liberals and the Labour party, they have formed a Yorkshire assembly. I suggest that he gets in touch with the grass roots of his party.

Oral Answers to Questions — Rail Fares

Ann Clwyd: If he will make a statement about the regulation of fare levels for rail passengers. [19423]

The Minister of Transport (Dr. Gavin Strang): Fares regulation is a matter for the franchising director. The current requirements are set out in the director's contracts with the train operating companies. We intend to establish a national rail authority which will take over the functions of the franchising director and develop the network as part of our integrated transport policy.

Ann Clwyd: Does my right hon. Friend recognise that with cut-price air fares it is now possible to fly the Atlantic for the same price as going by rail to Pembroke? And why does a train ticket last for only one month when a return air ticket lasts for three months?

Dr. Strang: My hon. Friend raises a number of important points. If we are to get more people to travel by rail, which is our objective, fares are an important factor. The duration of rail tickets is also a matter that should be considered.

Mr. Ottaway: Does the Minister agree that the success of the privatised railways represents the best way of getting passengers off the roads? [Interruption.] Wait for it. Is the Minister aware that the cheapest return ticket to Liverpool is £19? That is half the cost of a car journey. By holding their fares at less than inflation, the railways have seen a 7 per cent. increase in passenger use since privatisation. Is it not ironic that the only bit of railway line that the Government control—London Underground—is the only one which has seen a fare increase above inflation? What does that say to the travelling public?

Dr. Strang: I do not think that the British people will recognise the hon. Gentleman's description of the privatised and fragmented railway that the Labour Government inherited. That is why we are determined to set up a national rail authority and to achieve effective regulation so that the taxpayer gets value for money.

Mr. Pike: Is it not a fact that as a result of the fragmentation of the railway system passengers are very often not offered the cheapest rail ticket for their journey? Do we not need greater regulation to ensure that passengers get the best possible value and are offered the cheapest possible ticket when they go to buy one?

Dr. Strang: My hon. Friend raises an important point. He will be aware that a recent survey showed that as many as one in 10 people are not given accurate information when they seek information about a journey, the best way to travel or the price. We need to address that. It is vital, especially now that we have one telephone number for national rail inquiries, that people are given proper information when they inquire.

Oral Answers to Questions — Transport Policy

Mr. Matthew Taylor: If he will make a statement on the contribution of transport policy to the (a) Government's carbon dioxide reduction targets and (b) the Government's commitments made at the Kyoto conference. [19424]

Mr. Prescott: As the Kyoto negotiations have now been completed, I shall be making a statement shortly.

Mr. Taylor: Does the right hon. Gentleman recall that "In Trust for Tomorrow" promised a detailed environmental statement on the Government's new legislation and major policy announcements? As the Government's White Paper on transport will be vital to their strategy, will he ensure that there is an assessment of its impact, including a carbon budget, so that we can judge how the policies are intended to meet the Government's carbon dioxide reduction target?

Mr. Prescott: Yes.

Oral Answers to Questions — A34 (Noise Pollution)

Dr. Harris: What representations he has received on the noise pollution caused by the surface of the A34 passing by Gosford, Watereaton, Islip and Kidlington; and if he will make a statement. [19425]

Dr. Strang: I have received numerous representations requesting that this section of road be resurfaced to reduce traffic noise. Traffic noise is one of the issues being addressed by the wide-ranging transport review that we are undertaking at present.

Dr. Harris: Will the Minister consider holding a meeting with me and others to discuss the measures necessary to reduce noise on that road? Does he agree that one reason why the surface is the noisiest in Britain is the use of too-deep brushing for surfacing, which was recognised as a problem but not legislated against when the road was built?

Dr. Strang: The level of noise is certainly greater than was predicted by the Transport Research Laboratory when the road was built, but the hon. Gentleman will understand that serious traffic noise occurs in many other parts of the country. However, if he would like to discuss the matter with me I shall be delighted to see him.

Oral Answers to Questions — Bridges and Trunk Roads

Mr. Laurence Robertson: What is his Department's policy towards the maintenance of bridges and trunk roads; and if he will make a statement. [19426]

Dr. Strang: Our priority is to maintain public safety through a cost-effective programme of capital maintenance, to provide an effective, reliable and environmentally acceptable trunk road network.
Later this afternoon, my right hon. Friend the Deputy Prime Minister will be announcing the Department's spending plans for next year. They will include a substantial increase in money available for the maintenance of the trunk road network.

Mr. Robertson: I remind the Minister that it is extremely important to maintain bridges. I understand that

Gloucestershire is bidding for help to strengthen its bridges and that failure to provide such help will lead to the imposition of weight restrictions and great disruption, not only around those areas but to the local economies. Will the right hon. Gentleman take that into account?

Dr. Strang: The hon. Gentleman raises an important point. As he is aware, we are due to accept the heavier lorries on 1 January 1999, so it is vital that the bridges are up to strength. I can assure him that the Government are determined to achieve that for the bridges on the trunk road network.

Mr. Hope: Is my right hon. Friend aware that the national road condition survey showed a deterioration in the condition of motorways and trunk roads in 1996? Does he agree that his Tory predecessors failed to give sufficient priority to expenditure to maintain the condition of the motorway and trunk road network?

Dr. Strang: Yes, I agree absolutely with my hon. Friend and I am grateful to him for raising that. We inherited a neglected maintenance programme and we are putting that right. Conservative Members must understand that the neglect of road maintenance means that in the long run more money is paid out because one has to pay for the corrective work and for the overall maintenance as well.

Mr. Chope: The right hon. Gentleman is not right to say that road maintenance was neglected by the previous Government. At the beginning of this year, a report confirmed that the condition of the road network had improved significantly under the Conservative Government. Where is the right hon. Gentleman getting the extra money to invest further in road maintenance? Is it at the expense of other Department of Transport programmes? He has made much of the fact that he inherited a budget from the previous Government which gives him no flexibility, but he seems by his announcement to be saying that he has found some flexibility. I should like to know at whose expense.

Dr. Strang: I hope that the hon. Gentleman understands that our approach is no longer automatically to build new roads. The challenge is to use our existing road space and road network more effectively. That is why we are determined to improve maintenance.
With regard to the hon. Gentleman's first point, I suggest that he reads the evidence given to the Select Committee about a year ago, when the then Minister for Railways and Roads admitted that the Government were failing to maintain the trunk road network adequately and, furthermore, that the Government had failed to provide adequate money for the maintenance of the network. That is why we have so substantially increased it, as the hon. Gentleman will see later this afternoon.

Oral Answers to Questions — Railway Inspectorate

Mr. Alasdair Morgan: What recent discussions he has had with the railway inspectorate of the Health and Safety Executive. [19427]

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): My right hon. Friend the Minister of Transport and I met the chairman of the Health and Safety Commission and Health and Safety Executive officials, including the chief inspector of railways, on 16 October. We made it clear that the Government look to the Health and Safety Commission and Executive, as the railway safety regulators, to ensure that safety standards are maintained and, indeed, improved.

Mr. Morgan: Does the Minister agree that railways in Britain have some of the highest safety standards in the world? Is she aware of the remark made by the chief inspector of railways that if the railway companies were allowed to do what they wanted, safety standards would go down? Will she take steps to ensure that they are not allowed to do what they want?

Ms Jackson: The hon. Gentleman makes a valid point. This issue was highlighted in the Health and Safety Executive's most recent report, which fired a warning shot across the bows of railway companies, saying that they must not put commercial considerations ahead of safety. My right hon. Friend the Minister of Transport made it clear in his response to the Health and Safety Executive's report that the Government share and endorse that view.

Mrs. Dunwoody: We welcome that assurance. Will the Minister examine closely an excellent ten-minute Bill introduced in the House not long ago which proposed a national authority for transport safety, with the right of individuals to make known any breaches of safety at any level in any transport authority and to have them investigated?

Ms Jackson: I was privileged to be in the House when that ten-minute Bill was introduced by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) with her usual perspicacity, wit, information and intelligence. The Government's approach to safety has less to do with structures than with vital regulation, regardless of mode, which we believe will ensure safety. Existing safety structures allow individuals to raise their concerns if they perceive a lapse or deterioration in safety.

Sir Norman Fowler: Perhaps I may intervene in this love-in for 30 seconds. Will the Minister confirm that railways remain one of the safest ways of travel in this country and that there is no evidence privatisation has led to a reduction in safety standards? If we want more people to travel by rail—as I assume everyone does—we should emphasis that achievement and not snipe at it.

Ms Jackson: I trust that the right hon. Gentleman's opening remark was not touched with a tinge of the green-eyed monster. If he wishes to be part of a love-in, I am sure that arrangements can be made.
The right hon. Gentleman is correct in saying that the safety standard of railways as a means of surface transport is very high, but it would be wrong for this or any other Government to ignore what the Health and Safety Executive said in its most recent report. I repeat that it fired a shot across the bows of the privatised companies and highlighted the fact that they must not sacrifice safety

standards for what may seem to them to be a short-term financial advantage. The Government strongly endorse and support that approach.

Mr. Snape: Does my hon. Friend accept that I possess none of the virtues attributed to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody)? Does she also accept that the railways inspectorate has for many years commanded the respect of all those involved in the railway industry? Will she ensure that in future legal involvement in railway accidents follows rather than precedes the inspectorate's report? The less legal involvement early on in a railway inquiry, the more likely we are to find the truth behind those accidents.

Ms Jackson: My hon. Friend somewhat disappoints me. I had intended to say that I was second to none in my admiration for the contributions—based on expertise and experience—that he inevitably and invariably makes to debates on this subject. I hear what he says, but I am sure he would agree that although there are very few serious accidents on our railways, on occasion the police, for example, are involved in the resulting examination. Nevertheless, my hon. Friend makes a valid point and, as always, we shall give due consideration to what he has said.

Oral Answers to Questions — Road Infrastructure Improvements

Mr. Nicholas Winterton: If he will make a statement on the improvements that his Department assesses to be required in the trunk road and motorway infrastructure. [19428]

Dr. Strang: Future improvements to the trunk road network are being considered in the roads review, which is part of the integrated transport policy review.

Mr. Winterton: I think that everyone accepts that an integrated transport policy is of the greatest importance to the country, not only environmentally but in respect of value for money. Does the Minister accept, however, that trunk road and motorway improvement projects are vital to the on-going economic success of the country? In my constituency, the Macclesfield to Poynton A523 improvement, the Poynton bypass and the Manchester airport link roads east and west must be constructed if we are to minimise the impact on my area of the expansion of Manchester airport—especially the building of the second runway, which I have warmly supported.

Dr. Strang: The hon. Gentleman has been an assiduous advocate of the case for the road schemes that he mentions. As he will understand, they are all being considered as part of the roads review. As for his wider point, of course more investment in roads is needed, as is some further road building, but the Government's approach is no longer to opt automatically for a road solution. We must look at other options and, where appropriate, give consideration to public transport and more effective traffic management.

Mr. Stevenson: In considering what improvements are necessary to the trunk road system, will my right hon. Friend note that the regulations governing compensation claims for businesses and properties, and the noise


insulation regulations, are now outdated and anomalous and certainly do not reflect the justifiable claims of those whose properties are affected by trunk road building? As part of the reassessment, will my right hon. Friend consider the anomalies, and the serious misgivings that many of us have, and report back as soon as possible?

Dr. Strang: I know that my hon. Friend has taken a particular interest in the matter. He feels that adequate compensation has not been paid following the building of a road in his constituency. We shall continue to consider the matter, and I will take what he has said fully into account.

Oral Answers to Questions — Hammersmith Bridge

Dr. Tonge: What progress has been made on plans for reopening Hammersmith bridge; and if he will make a statement. [19429]

Ms Glenda Jackson: The London borough of Hammersmith and Fulham is responsible for progressing plans for reopening Hammersmith bridge. I understand that the repairs are programmed for completion by the end of summer 1999 and that while the works are in hand the borough intends to initiate discussions on the future use of the bridge.

Dr. Tonge: Is the Minister aware that the closure of Hammersmith bridge has acted as a catalyst in making people move out of their cars and on to public transport? Is she aware that the provision of public transport over the bridge is woefully inadequate? Does she accept that it would be worth helping London Transport to cope with the demand from the general public for bus services because in general that would be a very good way of encouraging people to get out of their cars and thus reduce the amount of road traffic?

Ms Jackson: The hon. Lady makes a valid point, which is borne out by experience. I understand that while the bridge has been closed to private vehicles bus patronage has increased by nearly 17 per cent. The number of buses per hour increased by almost 6 per cent. She may be interested to know that Hammersmith and Fulham borough is consulting even internationally on whether the bridge should, post repair, maintain the present system or be returned to carrying all vehicles up to 7.5 tonnes. I understand that these questions are appearing on the internet.

Oral Answers to Questions — London Underground

Mrs. Laing: What assessment he has made of the effect of the continuing public ownership of London Underground on its ability to attract adequate private capital. [19430]

Ms Glenda Jackson: We are urgently assessing how a public-private partnership can attract private capital for the Underground. We wish to harness private finance and skills and build on the Underground's public service record.

Mrs. Laing: Is the Minister aware that my constituents in Epping Forest will be disappointed to hear that the Government's plans to improve the London Underground, on which my constituents depend, are again being reviewed and delayed? There was laughter from Labour Members earlier when the success of rail privatisation was mentioned, but although the Government have the power to reverse the previous Government's railway privatisation they have not done so. Does that not implicitly tell us that the Government have changed their policies and their principles in relation to the railways, as they have on many other policies and principles that they held before the general election? Given that that is true—[Interruption.] Given that that is true, why will they not give up their dogma in relation to the Underground? [HON. MEMBERS: "Give way."] Why will the Government not admit that privatisation is the only way to raise the amount of capital needed for the London Underground? Privatisation is what my constituents want.

Ms Jackson: I can only assume that the hon. Lady's injury has caused a fever to her brain and that she is confusing the actions of the previous Administration with those of this Government. We have made it abundantly clear that we do not intend to have a wholesale privatisation of the Underground. We are dealing with surface rail as we find it, and we are committed to ensuring that the more than £2 billion of taxpayers' money that goes into our railways produces a high quality service.

Oral Answers to Questions — Thames Watermen

Mr. Efford: What representations he has received on behalf of Thames watermen regarding unlicensed individuals employed on the Thames. [19431]

Ms Glenda Jackson: I have not received any representations about the use of unlicensed watermen on the Thames. The licensing of watermen on the Thames is a matter for the Port of London authority.

Mr. Efford: I thank my hon. Friend for the answer. Is she aware that Thames watermen undergo a five-year apprenticeship to qualify to pilot boats on the Thames? Does she accept that safety on the Thames should be a central part of any regeneration in that aspect of London? Will she therefore accept that Thames watermen who are licensed and qualified to pilot boats on the Thames and who are currently unemployed have a legitimate argument in asking the Port of London authority to address the fact that unlicensed individuals are taking their work away from them? Will she bear that in mind in any future discussions with the authority?

Ms Jackson: I have no information that the jobs of licensed watermen are being taken away by unlicensed individuals, which I understand would contravene the byelaws that govern the Port of London authority. If my hon. Friend would care to furnish precise details, I shall be happy to examine the position.

Mr. Robathan: I know that the Minister and the Secretary of State are keen to encourage the use of the Thames. Will she therefore resist the plea to perpetuate that most extraordinary closed shop,


the five-year training scheme, and try to introduce training schemes that mean that people can pilot boats on the Thames safely but much more quickly than by taking part in the five-year training scheme —the old closed shop from old Labour?

Ms Jackson: I find it quite extraordinary that the hon. Gentleman should propose an expansion of use of the Thames, be it for pleasure or for transport, without ensuring that those responsible for carrying people on the river are properly trained and that safety standards are in no wise eroded. That is a further demonstration of what the Government have long argued—that the Conservative party had no commitment whatever to education and training to ensure this country's competitive edge in an international market.

Oral Answers to Questions — Rail Freight

Sir Robert Smith: What action he is taking to increase the proportion of freight transported by rail. [19432]

Dr. Strang: We aim to increase the amount of freight carried by rail. We have already taken action to boost the take-up of freight grants and we are working to get a better deal for Railfreight through the channel tunnel.
The House may like to know that tomorrow I shall be opening a new freight spur to Manchester airport which will mean that the bulk of the materials for the new runway will be carried by rail.

Sir Robert Smith: In trying to encourage more freight on to the railways, is the Minister concerned that brand new class 92 locomotives are lying idle in sidings because they do not have a safety case to travel north of Wembley? What action are the Government taking to try to ensure that that does not persist and that the class 92 locomotives go north of Wembley?

Dr. Strang: The hon. Gentleman makes an important point. I am sure that he is not suggesting, however, that safety is not an overriding priority. In terms of his constituency, the prospects for increased rail freight are most exciting. The distance to the channel tunnel and the investment that is taking place mean that we can look forward to a significant increase in the amount of material that is taken by rail, particularly from northern Scotland.

Kyoto Summit

The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): With permission, Madam Speaker, I should like to make a statement about the outcome of the United Nations conference on climate change, which I attended last week in Kyoto, Japan, along with my right hon. Friend the Minister for the Environment.
Man-made climate change is the greatest environmental threat facing the world today. In the United Kingdom, we have suffered record drought for the past two and a half years. This year, the world experienced the highest average temperatures that have ever been recorded. Terrible floods have engulfed central Europe, and droughts and storms have followed this year's El Nino. Forest fires have caused deadly pollution in south-east Asia and Australia. Our polar ice caps are melting, and only this weekend Mexico was hit by freak snowstorms.
Already, our sea levels are rising as ocean temperatures increase and the waters expand. If that continues, some island communities will disappear into the sea. A third of the world's population lives within 40 miles of the coast. Whole swathes of Britain's east coast could fall victim to rising sea levels.
The human race risks playing havoc with the world's weather systems. Unless we act now, we shall be condemning our children to a world of drought and crop failures, rising seas, mass migration and spreading disease. Nature is no respecter of boundaries. This is a global problem demanding a global solution, and the very justification for the Kyoto conference.
The main purpose of the Kyoto conference was for the developed countries to set legally binding targets for reducing greenhouse gas emissions between 1990 and 2010. Success was by no means certain. Consensus had to be achieved among 160 different nations, and the conference started with the major players poles apart. The European Union proposed a 15 per cent. cut; Japan a 2.5 per cent. cut; and the United States proposal was for a zero cut.
After long and gruelling negotiations, the protocol was agreed on Thursday morning, and will be open for signature in March. For the first time, developed countries, which account for over half the world's greenhouse gas emissions, will commit themselves to legally binding targets. The agreement will produce a cut of more than 5 per cent. in their emissions below 1990 levels by 2010.
I said before negotiations began that political will would be needed to deliver a successful agreement. The outcome of hard negotiations was that America moved from zero to a cut of 7 per cent.; Japan moved from a cut of 2.5 per cent. to 6 per cent.; and the European Union set the top standard with a cut of 8 per cent., a standard which was adopted by a total of 26 countries. The outcome demonstrated beyond doubt that genuine political will did exist in all those countries, and a political breakthrough was achieved. I have placed in the Library a full copy of the Kyoto protocol, which lists the figures for each country.
In four to five years' time, there will be a chance to review and, if possible, to improve the targets. The targets will cover the six main greenhouse gases, not only carbon

dioxide. The protocol also provides a number of measures that will help countries to achieve their targets. The measures include the possibility of trading in permits for greenhouse gas emissions; limited allowances for absorption of carbon dioxide by forests, which act as so-called "carbon sinks"; and provision for developed countries to gain credit by helping developing countries curb their emissions.
Fears—genuine fears—were expressed that those provisions might amount to loopholes in the agreement. That is why we, the United Kingdom, proposed the concept of a "window of credibility" for countries to demonstrate their firm commitment to the agreement; and it is why the European Union insisted that clear rules for all the provisions must be developed over the next two years or so.
The conference fully recognised that the developed world must take the lead in curbing global warming. It is now necessary to discuss how developing countries can become more involved in the commitment to that process. That is necessary for long-term success in tackling global warming.
The United Kingdom played a major role in ensuring that Kyoto was successful. I pay tribute to my predecessor as Secretary of State for the Environment, the right hon. Member for Suffolk, Coastal (Mr. Gummer), for the part that he played in agreeing the Berlin mandate in 1995, which set the parameters for Kyoto. He was, indeed, a member of the United Kingdom delegation.
The Government have demonstrated at the highest levels their commitment to environmental issues. My right hon. Friend the Prime Minister highlighted climate change at the G8 summit in Denver, at the Earth summit in New York, and at the Commonwealth Heads of Government meeting in Edinburgh. My right hon. Friend the Foreign Secretary has put the environment at the heart of his foreign policy and worked for the successful conclusion at Kyoto. At the request of the Japanese hosts, I myself chaired the meeting of the developed countries that was held last month in Tokyo. In the run-up to Kyoto, I met the leaders of a number of developed and developing countries.
I should like to praise the efforts of the Prime Minister himself, who was in telephone contact with other world leaders to secure the final agreement. I should like also to thank my right hon. Friend the Minister for the Environment, who played a key role with our European partners. Finally, the agreement would not have been achieved without the sheer professionalism and commitment of British civil servants. It was a really strong British team effort within a powerful European contribution.
We must turn our minds now to implementation. The United Kingdom will assume the European Union presidency at a crucial stage. Over the next six months, we need to agree how the European target of an 8 per cent. reduction will be shared out among member states; policies and measures at a European level to help achieve those targets; and the European position on rules for the various issues that I mentioned. My right hon. Friend the Minister for the Environment is today discussing those very matters at the Environment Council in Brussels.
Previously, the European Union had agreed proposals to achieve an average 10 per cent. cut in emissions. There were different contributions from different member states.
Germany, for example, agreed a minus 25 per cent. target, whereas Portugal agreed a 40 per cent. increase. We need to renegotiate those figures in the light of the outcome of Kyoto. We shall not be certain of the legal target applying to the United Kingdom until that share-out has been determined. We shall, of course, accept our legal obligation as our first priority, but shall still work for our aim of 20 per cent., as set out in our manifesto.
We are already working on plans to achieve our targets, taking into account the outcome of Kyoto. Next year, we shall publish a consultation document. In setting out our programme, we shall consult widely—particularly industry, local authorities and environmental groups, which will all have key roles to play in delivering the reductions. I reassure industry—as the Prime Minister did at our business summit—that we shall not take any unilateral measures that will unduly damage UK competitiveness.
Tackling climate change is about opportunity and gain, not pain. It goes hand in hand with building a better, more modern and affluent Britain. It is about improving transport systems in a way that will give us a better quality of life and cleaner cities; improving the housing stock, which will give us warmer, more comfortable homes and tackle fuel poverty; using less energy in a way that will make our industries more efficient; and ensuring that the UK is at the forefront of the world environmental technology market so that we can create new jobs and business opportunities. It is good for the environment, good for the economy, good for people and good for jobs.
I believe that Kyoto will be remembered as the place where the world, in a United Nations forum, faced a crucial decision and made the right choice. Failure, which many had predicted, would have condemned future generations to untold misery and disaster. We have taken the first, but only the first, crucial step to curbing climate change. There is still much to be done, but I am certainly proud of the role that the United Kingdom has played in this achievement.
We do not own this world; we hold it in trust, to hand on to our children's children. We owe it to them to build on the Kyoto agreement to safeguard their future.

Sir Norman Fowler: I welcome the fact that there was an agreement in Kyoto last week because, surely, that reflects a growing acceptance by national Governments that international action is needed to tackle the problem of climate change. I endorse what the Secretary of State said about my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) and his contribution.
I am sure that the Secretary of State will recognise that the agreement is a long way short of the objectives stated by the Government and the European Union, and that that has led to disappointment being expressed by bodies such as Friends of the Earth, Greenpeace and the World Wide Fund for Nature. Against that background may I ask the right hon. Gentleman some short questions?
The right hon. Gentleman has confirmed that the Government still intend to aim for a 20 per cent. reduction in emissions by 2010. Will he say more about the exact policies by which that target will be reached? How will he ensure that industry, for example, is not disadvantaged because Britain is aiming for a more stringent target than other developed countries? Will he confirm that any

increase in green taxes will be compensated for by tax reductions elsewhere and that green taxes will not be seen simply and exclusively as a general revenue raiser?
On emissions trading, what safeguards and checks are there to ensure that countries taking credit for emission reductions have actually achieved those reductions rather than their having been brought about because of temporary industrial depression in a particular economy? If we are to cut carbon dioxide emissions, that will involve planning policies aimed at preventing as many people as possible from having to make long commuting journeys into work. Is not that another reason why we should do all we can to preserve the green belt in this country and put energy and resources into developing the brown-field sites in our towns and cities?
Can the right hon. Gentleman tell the House—he touched on this—how Britain intends to use its presidency of the European Union and exactly what policies and measures he intends to propose for the detailed implementation of the Kyoto agreement? [Interruption.] I hope that the Minister for London and Construction realises that we are seeking to be constructive.
Does the Secretary of State recognise that on both sides of the House, with the exception of the Minister for London and Construction, the importance of making urgent progress is recognised and fully shared?

Mr. Prescott: I thank the right hon. Gentleman for his welcome for the agreement. I think that both sides of the House will endorse that. It was important to get an agreement on legal targets, and establishing that legal framework was probably the main contribution of the conference. Most of the environmental non-governmental organisations have made that sound point. It is a first step and no more, but it is an important first step. It is right to call it historic.
The right hon. Gentleman asked how we intend to achieve our aim of a 20 per cent. reduction. I made it clear in my statement that that is a target which we set for ourselves and that it was not dependent on Kyoto. We have already embarked on the policy changes necessary to achieve that. Indeed, the Government's scientific advisers have told us that it is possible and we have already produced the first paper for the Cabinet Committee, to show how that can be done. Methods include improving renewables and an integrated transport system—all of which will involve Government statements and a new planning framework.
I am pleased that planning is no longer an ideological issue of dispute between the two parties. Planning is essential if there are to be positive targets for industry to achieve. That point was made by representatives of business when they met my right hon. Friend the Prime Minister; they wanted practical targets, and we agree. We hope to produce a statement on that subject as a beginning, next year. We shall consider what happens in the negotiations that take place in Europe, based on the legal targets and Europe's legal commitments.
My right hon. Friend the Chancellor of the Exchequer has made it clear that he will make more statements about the taxation framework in the Budget—he also made that clear in the recently published Green Paper. Taxes will play a part in the process, just as fuel duties did under the previous Administration.
Trading emissions are a matter of concern. It became clear to me, as I toured various parts of the world and talked to leaders, that each country had conditions relating to how it would achieve the target. New Zealand's conditions involve forests; Australia's involve land clearance; America's involve trading emissions and the new funding arrangements for using credits. In those circumstances, it was clear that no agreement could be achieved on that subject within the negotiating period at Kyoto.
The Americans had also made it clear that Congress would not endorse the target unless the developing countries signed up, which meant that there had to be a further period within which the rules could be worked out. It was important that the measures should not be seen as loopholes—the agreement's credibility very much depends on that. I do not believe that the American Congress will endorse the agreement unless the rules are worked out. There will be an opportunity for people to sign up in March and agree a period for ratification—some three or four years from now, after the presidential elections, when we can work out all the details.
The right hon. Member for Sutton Coldfield (Sir N. Fowler) is right to say that the agreement's credibility is very much linked to flexibility. That is why we shall use our European presidency, which begins in January, and our leadership of the G8 countries, which meet here in the next six months, to place on the agenda—as my right hon. Friend the Prime Minister has been doing—environmental issues and how we sort out the rules, what the rules are and whether we can bring the experts together quickly. We are rightly considering those issues as a matter of priority. I hope that our policy enjoys the full support of the House, as it is necessary, and I welcome the right hon. Member for Sutton Coldfield's words of support.

Mr. Andrew F. Bennett: I congratulate my right hon. Friends the Deputy Prime Minister and the Minister for the Environment on all their hard work during the negotiations. When will the treaty begin to work? What are the prospects of the United States ratifying it? What mechanism is there for the process to be reviewed, particularly if the evidence of climate change gets worse and public opinion around the world demands faster action than was originally agreed?

Mr. Prescott: Those are essential questions and I thank my hon. Friend for his words of support, particularly as he is the Chairman of the Select Committee on the Environment, Transport and Regional Affairs, which will have an opportunity to question us further in future. We have placed the protocol in the Library. The conference is likely to be called within four years, but within 12 months I believe that a conference will be called—I am afraid that the country's name has slipped out of my mind.

Ms Joan Walley: It will be in Buenos Aires.

Mr. Prescott: Buenos Aires—I am grateful to my hon. Friend. That conference will be called within

12 months, and we can begin to assess how far the agreements have gone, what we have done about the details and the rules that will apply—that is equally as important as the legal targets that were achieved at Kyoto.

Mr. Matthew Taylor: I am sure that the Deputy Prime Minister will agree that there was a risk of the process collapsing, and I join others in welcoming the agreement that was secured in those circumstances. Nevertheless, the net outcome of the figures agreed is that global warming will continue to worsen and the agreement will not reverse the position. Further action therefore needs to be taken to secure a tighter international agreement.
Can the right hon. Gentleman confirm that the Government will stick by their manifesto commitment to a 20 per cent. reduction in carbon dioxide emissions, although the agreement is about a basket of gases? Will he explain what he means by saying that the priority will be the legal obligation rather than the UK Government's target of a 20 per cent. cut? It is not clear how that figure will be met if the concentration is on a much lower figure.
Will the Deputy Prime Minister work with the Prime Minister to use the EU presidency to ensure that the EU sticks, at the minimum, to its current 10 per cent. reduction policy—and ideally, with the 15 per cent. cut that it offered—rather than simply reverting to the legal obligation of 8 per cent., which would be a step back for the European Union as a whole?

Mr. Prescott: I am grateful to the hon. Gentleman for his words of support. He is right to say that the legal obligation is neither as ambitious an achievement as many of us would have wanted nor as ambitious as the European target of a 10 per cent. cut or the hoped-for 15 per cent. cut. The conference was, however, about getting 160 nations to agree. The hon. Gentleman may know that the conference could not settle its differences by voting; everything had to be done by consensus, which made matters far more difficult.
The real point is the net reduction of greenhouse gases. The reduction in greenhouse gases by developed countries—only the developed countries have agreed to such a reduction—is more than 5 per cent. That is a considerable achievement; most people predicted a far lower figure. The hon. Gentleman is, however, right to point out that greenhouse gas emissions also come from developing countries. They were not prepared—indeed, this was part of the Berlin mandate—to sign up to reductions. They made it clear that they wanted the major polluters to sign an agreement and that they would then make their decision. The ball is now in their court. If we want a real global solution, we have to get everyone in it, not just the developed countries, and that will make a real contribution.
People will begin to see that many opportunities can come from the changes involved in meeting the targets. That will encourage them to go further and to set even more stringent targets. The hon. Gentleman will be aware that the first set of targets under the Montreal protocol was easily achieved, and that the countries involved met again and set further targets. That is a useful example to us; we must get on with the job.
The hon. Gentleman made an interesting point about countries having targets different from the legal ones. It is our responsibility to observe our legal targets before the


voluntary ones. We have not, however, waited for the legal target. We are setting a target of 20 per cent., as we promised, and we are already implementing the programme to achieve that. We are advised by Government scientists that that target is possible, and that is why we made our commitment.
As the hon. Gentleman knows, in Europe we have to negotiate changes internally in what is known as the European bubble. Reductions in greenhouse gases—six rather than three are considered under the new protocol—will affect countries such as Germany, which will want to renegotiate its position. We shall have to consider the differential targets within that framework. That will be a consideration for us to bear in mind, but at the moment, as is our commitment, we are working on the 20 per cent. target as well as recognising our legal target. If other European countries are prepared to join us in having not only the legal target of 8 per cent. but a higher one, they will, once again, be joining Britain, which has set the lead. We hope to encourage Europe to come that one step further with us.

Mr. Dennis Skinner: Is my right hon. Friend aware that he is engaged in an almost insoluble problem? Most countries do not operate on an interventionist basis. In fact, most of the problems of global warming and all the rest of it have come about simply as a result of the use of market forces and businesses' freedom to do as they like.
I believe that the problem can be solved only be intervention, red tape and regulation, which is totally contrary to the views of Conservative Members and, indeed, those of Liberal Democrat Members. I wish my right hon. Friend well, but I believe that he knows as well as I do that without proper intervention by every country and without every country acknowledging the need to do something as opposed to uttering abstract statements, the Kyoto conference will be like Rio and many before it.

Mr. Prescott: I certainly hope that that is not the case and that it is in our hands to do something about it. The more united we are in achieving those objectives, the better.
Like my hon. Friend, I welcome the fact that planning, intervention and targets are part of an intelligent and rational approach to the problem, but I also have to recognise that, as the Americans would be quick to point out, trading emissions is an area in which there can be an element of market trading without the involvement of massive bureaucracy. I am quite prepared to consider that, given that I know that it worked quite well in America in respect of sulphur emissions. It may be a possibility—I do not know. We shall have to look at the rules, but I am prepared to keep an open mind on those matters, as long as we achieve the reduction in greenhouse gases that we all want. If we do not achieve that, we shall continue toward the disasters predicted by our scientists, which will result from the climate change brought about by ever increasing amounts of greenhouse gas emissions.

Mr. John Gummer: I thank the right hon. Gentleman for his comments and congratulate him on his success. Does he agree that we ought to congratulate the officials, who became very important to the whole European Community, on the work that they have done?
Can the right hon. Gentleman help me on two matters? First, would he be willing, over the next year and with the developing countries, to seek a means of creating a system of convergence that recognises that, if in the end we have to share out the emissions that are possible, we shall have to share them out on a fair basis at some point in the next century? We need to start working on that before Buenos Aires. Secondly, would he be willing to bring into his office representatives of American-owned companies in this country, such as Vauxhall or Esso, to see whether we can exert some pressure on the mother companies in the United States, which have taken so strong a view against doing something about global warming? British companies operating in the United States, such as Shell, might well play a part in that effort, if the right hon. Gentleman were willing to take that as one of the issues on which we could get some progress.

Mr. Prescott: I thank the right hon. Gentleman for his words of support. Just before he entered the Chamber, I had paid proper tribute to the civil servants, who were absolutely brilliant in assisting in our bringing about the agreement, but one cannot say too much. Both the right hon. Gentleman and I would agree on our tremendous admiration for the ambassador who chaired the conference, who actually achieved the agreement. He was quite remarkable and, in my view, the agreement would not have been achieved without his ability to get 160 nations to come together on an issue on which there were very difficult differences between countries. I certainly want to make it clear that his contribution was very considerable indeed.
I agree with my right hon. Member—with the hon. Friend; forgive me, the niceties of the House are lost on me from time to time. As long as you understand the point, Madam Speaker, and I am sure my hon. Member—[Laughter.] Yes, why do I not say it? He was a right hon. Friend over there—he joined in a British cause to do something about the environment and, as I said, his record shows his commitment to that cause.
We have to move on from here and ask how to achieve the settlement. The British presidency gives us a great opportunity, as does leadership within the G8. There was some small criticism of Russia's contribution, but there is a chance for Russia to reconsider its position. It was hoped that Russia would have had a reduction, but it did not achieve that. If it had settled for the minus 5 per cent. recommended by the conference, we would have had an even more substantial contribution. It is now time for us to talk to all parties and ask, "Do you think that you can make a better contribution than you do at the moment?" I am sure that the G8 gives us an opportunity to open up that debate. We shall now start those discussions, to make sure that we can do even better than we do at the moment.
As for the criteria that will be used to monitor emissions, they clearly need to be fair. If they are not, we shall lose credibility; if there appear to be loopholes, people will feel that the whole possibility of agreement has been undermined by failure to secure fair means and rules, not only for emissions trading, but for carbon sinks and all the other flexible areas in the agreement. We shall do our utmost to ensure that they live up to the standards that we set at Kyoto.

Mr. Michael Clapham: I, too, congratulate my right hon. Friend on


all his work, but do I take it from what he has said that the mechanism for policing the buying and selling of emissions is not likely to be put in place until the meeting in Argentina next year?

Mr. Prescott: I thank my hon. Friend for his kind remarks. I hope that, through our presidency and other means available to us—we must not underestimate the contribution by the Commonwealth Heads of Government meeting, which suggested that more could be done between developed and developing countries—we shall work on that formula. We shall not wait until that conference; indeed, I hope that, in the 12 months before then, we shall work out the principles and details needed to make a start on getting a fair agreement, especially in respect of the rules affecting emissions.

Rev. Martin Smyth: I welcome the Deputy Prime Minister's statement, and the fact that he is pressing ahead towards a 20 per cent. reduction. Did the 15 per cent. represent an original bargaining position on the part of the European Union, so that Europe could pride itself on the 8 per cent., which went beyond what the other countries wanted? Had the average of 10 per cent. already been worked out? Is there not a place for moral leadership by Europe in this matter? As it is alleged that the United Kingdom's emission reductions have coincided with the decline of our coal industry, is the right hon. Gentleman confident that we can reach the targets that we are setting ourselves?

Mr. Prescott: I thank the hon. Gentleman for his kind remarks. I believe that the 8 per cent. does represent moral leadership; indeed, we tried to press the others to go for a higher figure. Bearing in mind the fact that the Americans had to travel from zero to 7 per cent., that represented quite an effort. There was never any question of the Americans agreeing to Europe's 15 per cent. That figure was a target to aim at. The European Union had gone for 10 per cent., as many of the negotiators were well aware. They were also well aware of Europe's bubble principle, allowing for distinctions to be made within the bubble. That gave rise to a number of difficult arguments during the negotiations.
Europe still has the chance to hold the moral high ground. We started from the position that there should be parity between Japan, America and ourselves, but it was clear that Japan would go no further than 6 per cent., while the Americans were prepared to go to 7 per cent. We went one step further, to 8 per cent. If we had gone any lower, quite a number of countries would have been prepared to go down to our level, and any agreement on net emissions would have been a failure.
We can continue to argue with other countries. There is no reason why we cannot set a target higher than the legal one, and use that as a means of pushing and shoving some of these other countries to agreeing to increase their targets beyond the legal targets as well. Europe must lead the way. As the measurement is given in terms of the proportion of the targets that is reached, one can assume that Europe has already given a greater lead than America—although we still welcome the overall agreement.

Mrs. Louise Ellman: Does the Deputy Prime Minister agree that this country would be

greatly assisted in meeting its targets if, in addition to consulting local authorities and environmental groups, he were to consult in due course the proposed regional development agencies and regional chambers, so that their contribution could be considered in matters such as the integration of public transport and the production and manufacture of environmentally beneficial technology for industry?

Mr. Prescott: Yes, my hon. Friend is absolutely right. The regional development agencies will play their part in the greening of the United Kingdom and in encouraging companies to take advantage of the technology that will arise in response to the environmental changes necessary to meet the targets. This is about gain, not pain. As other countries have done, we should recognise the advantages of the process—we have yet to grasp the full potential of the changes.
We shall talk to the local authorities and environmental groups. The regional development agencies will play their part in setting regional priorities for integrated transport systems, and in the regional planning framework—deciding where industry and housing are to be located, for instance. Determining how people move from A to B can make a significant contribution to controlling greenhouse gases.

Mrs. Teresa Gorman: Does the Deputy Prime Minister agree that in our zeal to improve the environment, we should not imperil our domestic industries in favour of those of other countries that will not share his degree of commitment? Does he further agree that, far from being perverse, our American allies are seriously considering alternative views on global warming, including views based on research produced by the National Aeronautics and Space Administration and correlated in the American media by the American Global Climate Commission, which has considerable influence on the American Government?

Mr. Prescott: Not much influence, I suspect, judging by the fact that the Americans reached an agreement. There is no serious argument about the research any more; most people are fully aware of its implications. A great deal of work has been done, although of course people must make up their own minds. Certainly, most countries agree on the subject, and the conclusions of the research pushed those countries to reach an agreement more ambitious than the one that had been predicted. I certainly would not want us to pursue a policy that disadvantaged our industries against their competitors. However, there are many advantages to be gained from having more efficient industries, a better transport system and people living a better quality of life.

Mr. Tam Dalyell: On the far from simple question of the carbon sink, does my right hon. Friend know that while he was pursuing his task with commendable energy, the President of Brazil and his entourage were in Britain and that some of us had the good fortune to talk in depth to Senor Dr. Martins, who is the head of Ibama? He said that if the world was so concerned about the rain forest as its lungs, the rest of the world had certain obligations to look after its lungs.


Were those obligations in terms of international debt raised in Kyoto, and what, realistically, can we hope to do to look after the planet's lungs?

Mr. Prescott: My hon. Friend reminds me, by using the word "lungs" with regard to forests, of a lecture that I heard by the famous Jacques Cousteau—I have an interest in diving—when he said that the oceans were the lungs of the world. Anybody who looks at climate change and at what is happening to the forests, the weather and the oceans cannot but be impressed by the tremendously sophisticated system that produces our climate.
While we need to be concerned about the rain forests and the oceans, those matters were discussed at the UN Earth summit in June. We could not reach an agreement on forests because a number of countries opposed it, but we reached an agreement on oceans, and next year is designated the Year of the Oceans.
While I was in Australia, I took the opportunity—I confess that it was on a day off—to dive on the barrier reef. It was quite an experience to see all the fish and living coral; it was nature at its greatest. When I dived in the Mediterranean, I saw no fish, just a Coke bottle and a plastic cup. That is the reality. Many of our oceans are dying and our rain forests are under threat, which is why people no longer doubt the seriousness of the scientific projections on climate change. I am proud that this Government are to the fore in making the changes.

Mr. David Prior: In view of the massive predicted increase in the burning of coal for coal-fired power generation, particularly in India and China, will the right hon. Gentleman put his considerable weight behind efforts to beef up clean coal technology in the UK?

Mr. Prescott: The hon. Gentleman makes a powerful point. All Governments have failed to give the support to clean coal technology that was desperately needed. That subject is part of an on-going review of energy policies. The hon. Gentleman reminds me that China, with its tremendous coal resources, did a deal with America to build 150 nuclear plants. I presume that that represents the influence and pressures that there will be between trading nations. Such deals will be influenced by environmental considerations, which is one of the points that was made with regard to trading emissions. We must be careful to ensure that the rules are absolutely clear, because if we leave loopholes, they will undermine the credibility of any change and damage our achievements in Kyoto.

Ms Joan Walley: I appreciate all the work that my right hon. Friend has done. It is clearly teamwork, and we can be as proud as if we had brought the World cup home because, in the end, any achievements will be there for all the people of the world. Has my right hon. Friend considered how Parliament could be used to take the issue further forward? If we need the consent of the whole world to go forward with the proposals, Parliaments around the world have a part to play. We desperately need education, so that all the nations of the world can back up their Governments in making urgent progress.

Mr. Prescott: My hon. Friend makes a good point. I welcome the agreement, and we should all be thrilled

by it. It is an important step forward. I do not know whether it can be equated with the World cup, but that reminds me that I was a member of the House of Commons team that beat the German parliamentary team by two goals to one, so at least we held our end up politically.
My hon. Friend makes an important point. Changes are necessary in attitude and approach, and Parliament will be at the centre of such changes. How we manage change and meet the challenge is crucial. The Environmental Audit Committee will play an important part. We have also established a Cabinet Committee to make sure that all Government Departments are aware of the changes that will take place.
Our initiative in establishing the Environmental Audit Committee emphasises the fact that we shall have a Committee snapping at our heels to ensure that we live up to our fine promises in carrying out the detail of our policy. The House will play a major part in persuading the nation that it is right to go along that road. Frankly, I think that the nation is ahead of us. People know that changes are needed, and we shall bring them about.

Mr. Andrew Robathan: I pay tribute to the efforts of the right hon. Gentleman who, I believe, cares greatly about these matters. Must not the detailed policy take account of two issues, which were raised with me this morning? First, the Energy Saving Trust is scheduled to take a cut of about 50 per cent. in its funding. The right hon. Gentleman may say that that decision was made by the previous Government, but will he now take action to reverse it, especially as he spoke about using less energy, which is what the Energy Saving Trust is about?
The second point concerns the suspension of planning permission for new power stations. That is holding up 700 MW of capacity for combined heat and power. If that 700 MW of CHP came on stream, 700,000 tonnes of carbon emissions would be saved each year. Will the right hon. Gentleman consider that carefully and further encourage CHP?

Mr. Prescott: Those matters must be taken into account. The fine phrases and the targets to be set are all very well, but what will count is the detail of those policies. Whether there is a change in the funding of the Energy Saving Trust, and who introduced it, is not the point. We must reconsider much of our expenditure and our priorities. We have now accepted an agreement from Kyoto that sets legal targets. All our policies will have to be judged by their contribution to that, because we intend to enter seriously into our legal target, and into the target of 20 per cent. that we set for ourselves.
We are considering the moratorium on the power stations in the context of our energy policy. It is an essential part of any agreement on the environment. We shall make a statement at the appropriate time.

Mr. Bill O'Brien: I thank my right hon. Friend for his statement. I share the concerns that he expressed in his opening remarks, when he suggested that if action is not taken, humanity will destroy our world. It is therefore important that we take note of the points made in his statement.
Does my right hon. Friend accept that certain communities, such as the mining community, have made substantial contributions to reducing pollution of the


atmosphere? Will he take the lead, as he is doing in many other respects, in ensuring that clean coal technology is developed in the United Kingdom, for use throughout the world?

Mr. Prescott: My hon. Friend makes an important point, which we are taking into account. I am concerned about the consequences of change resulting from environmental policies. When I visited mining areas in the constituencies of my hon. Friends the Members for Bolsover (Mr. Skinner) and for Mansfield (Mr. Meale), I was struck by the consequences of living in communities that have been denied their main source of employment. We have set up the coalfield community task force to look at how we might help to provide the jobs necessary to reverse the decline that we witness in those areas. We have an obligation to help the parts of our communities that might well be affected, and to see whether the opportunities arising from the agreements could be directed to those areas. We are examining all those aspects.

Mr. Andrew Stunell: We welcome the fact that there has been an agreement and that the momentum is being maintained. We share some of the views expressed by the Deputy Prime Minister about the progress that remains to be made. We are delighted with the enthusiasm that he has shown in the House today for going further, and we shall encourage him at each step of the way.
I shall press the right hon. Gentleman on one or two points. He referred to the difference between the legal target of 8 per cent. and the voluntary manifesto target of 20 per cent. I put it to him that in achieving the 20 per cent., we shall easily achieve our legal requirements. Therefore, is not that the target on which to focus British policy and the target which we should take into our discussions with the European Union?
I refer to one or two specific points. The Energy Saving Trust has been mentioned.

Madam Speaker: Order. The hon. Member for Truro and St. Austell (Mr. Taylor), the Liberal Democrat environment spokesman, made quite a long contribution earlier, to which he received a considerable reply from the Deputy Prime Minister. Hon. Members should ask one question each—that is what this process is all about. Mr. Prescott, will you respond?

Mr. Prescott: I am grateful to the hon. Member for Hazel Grove (Mr. Stunell) for his remarks—although he is having difficulty keeping up with the pace that we have set. We shall do our best to achieve the targets.
The hon. Gentleman made a serious point. The legal target in Europe will be achieved in a certain way, and we have an obligation to achieve it in that manner also. That will have some implications for the 20 per cent. target, but it should not prevent us from continuing with our programme—which we are spelling out at present. We have an obligation to the legal target, but that will not deter us from achieving a higher target, which we shall

set for ourselves and which we are currently working out. I shall make a statement about that to the House at the appropriate time.

Mrs. Helen Brinton: I join hon. Members in warmly welcoming the Deputy Prime Minister's statement. Does my right hon. Friend agree that local energy advice centres, which are funded by the Energy Saving Trust, play a significant role in combating global warming? Does he further agree that, under the previous Conservative Administration, those centres—including my local centre in Peterborough, which has been highly praised nationally—had a very insecure funding future? Will my right hon. Friend bear in mind the importance of those centres when he takes his imminent decision about the funding of the Energy Saving Trust?

Mr. Prescott: I thank my hon. Friend for her kind remarks. The Energy Saving Trust and the local centres will be very important in achieving our targets. Many decisions that have been taken must be reassessed in view of the targets that were set in Kyoto. It is true that all communities must make an effort to achieve the targets that we have set for ourselves, and we shall bear that in mind during the review.

Mr. Alan Simpson: I congratulate the Deputy Prime Minister on helping to secure any agreement at all in Kyoto. I also congratulate him on advocating a higher level of cuts around the world and on ensuring that the words "contraction" and "convergence" were included in the agreement in the final hour of negotiations. They will prove to be the cornerstone of any workable progress in this area in the century ahead.
Will my right hon. Friend ensure that two points are raised during the United Kingdom's presidency of the European Union and in discussions with the G8? First, the targets cannot be met acceptably by transnational companies simply relocating to the developing world and being allowed to get away with production methods that increase, rather than decrease, pollution. Secondly, in approaching tradeable permits, we must examine not the exchange of cash with the developing world but a gift relationship in sustainable technologies. That will allow development in the southern hemisphere according to the best standards for the next century rather than the worst standards of this century.

Mr. Prescott: I thank my hon. Friend for his kind remarks. The agenda of the EU presidency, and particularly discussions in the G8, will be decided by my right hon. Friend the Prime Minister. My hon. Friend may be assured that I shall push to ensure that issues relevant to Kyoto are discussed. That is essential if we are to achieve the desired framework for the timetable in which the groups will work out the rules for trading emissions. It would be a wasted opportunity if such discussions did not occur. My hon. Friend will be aware that the agendas are decided by the Prime Minister and by other Prime Ministers and Presidents involved in the process. Nevertheless, those matters will play an important part.
My hon. Friend referred to transnational companies, their contributions and the tradeable permits that will be involved in exchanges with different countries. Those matters go to the credibility of the rules. Those rules are


important, and about 40 developing countries were prepared to make a voluntary commitment on trading in Kyoto. However, that matter was not included in the agreement. It is a sign, however, that they see it as a possible way forward for themselves.
My hon. Friend was fair-minded when he talked about industrial processes in the third world. We must recognise that third-world countries will produce more CO, gases as part of the industrialised process. It would be wrong for developed countries to say, "We have come through this process the dirty way. We know that it is a dirty way from which to come, so you cannot have the benefits that come from the industrialised process."
We must achieve a proper balance and recognise the differential contributions that must be made by both developed and developing countries. In effect, the Kyoto agreement states that the developed countries can say, "We have made our commitment and we want you to make yours." In that process, the developed countries will have great opportunities to work with the developing countries, provided that there is an agreement that that should happen and that it is done voluntarily. It must be recognised as part of the procedure of improving the prosperity of the peoples of the developing countries in the process of industrialisation. I am talking of the gains that come from these processes, and they must be brought home to the public.

Mr. Norman Baker: I welcome the Deputy Prime Minister's efforts, which have been substantial. It is good to see Britain losing its "dirty man" image. I am aware that the right hon. Gentleman regards national targets as important, and at the same time we know that vehicle emissions make a significant contribution to greenhouse gases. Against that background, will the Government be supporting the Road Traffic Reduction (United Kingdom Targets) Bill?

Mr. Prescott: It is important that the owners of vehicles can make one of the largest contributions to the reduction of CO2 emissions, and that is a problem which we must consider. The White Paper will take up the problem and the Government will make our predictions within an integrated transport policy and establish what we think is the appropriate balance. Within such a policy, it is necessary to balance everything that it is hoped to achieve over a period. We welcome the debate that continues to take place, and we are not making recommendations one way or the other. Right hon. and hon. Members can make up their minds about the private Member's Bill. The Government will set out their view in the White Paper on an integrated transport policy, which will be put forward in May.

Mr. Hugh Bayley: I thank my right hon. Friend for answering the question that I put to him at Question Time, by giving a commitment that Labour will continue to back the 20 per cent. reduction.
Since the Kyoto agreement becomes legally binding when countries ratify the treaty, what authority will deal with the countries that break their legally binding obligations, and what penalties will be imposed? Could

consideration be given to penalties that will help to repair the damage that is done to developing countries, such as the flooding of coastal areas, crop failures and the spreading of diseases, to which my right hon. Friend drew the attention of the House?

Mr. Prescott: I thank my hon. Friend for his words of support. The protocol is in the Library, along with the details of how we approached it. As for sanctions, we begin with the hope that the countries involved will set out to achieve the targets to which they are legally bound. If they fail to do so, there are means by which they can be pursued within their own courts. That applies especially to America. One of the Americans' arguments was that if they signed up to legal targets, they could be sued much more effectively within their own courts than within the European courts. To some extent, they were right.
The sanctions that are envisaged in the international treaty apply to trading. There was talk of fines, the proceeds from which could be used to assist third-world countries. There was talk also of the denial of votes in future decisions. Those may not seem to be powerful enough sanctions, and perhaps they will be reviewed. An important step forward has been taken in achieving a legal agreement. Where we find that it is not sufficient, there will be continuity of assessment. Insufficiency can be examined if we find that there is a failure in achieving the targets that have been agreed.
We set the overall target for 2010, but a review conference will review the progress that countries have made. That means that we shall not have to wait until 2010 to ascertain whether there has been failure. We shall know what progress has been made well before then.

Mr. Fabian Hamilton: Does my right hon. Friend agree that since the deregulation of buses in 1986, there has been a considerable increase in the number of buses that cause pollution on our roads? Indeed, about 15 per cent. of buses now cause about 50 per cent. of pollution. What plans does my right hon. Friend have to take some of these polluting monsters off the road as part of our contribution to the Kyoto agreement?

Mr. Prescott: That is one of the measures that we are considering in our White Paper. It is quite true—the evidence is clear—that deregulation has meant that there are more buses, but fewer people per bus, and fewer services, which forces more and more people to use their cars instead of public transport. We very much need to address that.
We hope that travel by bus will become more reliable, and that buses will be better and, in many cases, newer than the ones that we currently have, with an engine that meets environmental requirements. We are also talking about the fiscal framework with regard to vehicle excise duty. All those points are being considered in the White Paper. The bus has a major part to play in providing not only a better transport system but a better environment, which would arise from an integrated system. It is very much at the heart of the White Paper that we shall produce in May.

Water Industry (Scotland)

The Secretary of State for Scotland (Mr. Donald Dewar): With permission, Madam Speaker, I wish to make a statement about the outcome of the Government's review of the Scottish water and sewerage industry.
As hon. Members will know, our manifesto contained a commitment to return the Scottish water industry to local democratic control. In an answer on 5 June, Official Report, column 233, I said that I had asked my officials to conduct a review of the water industry and to report to me by November, which they have done.
The review team had extensive consultations with the three water authorities, the Convention of Scottish Local Authorities, and the Scottish Water and Sewerage Customers Council. We also issued a public consultation paper, which produced 91 responses. I am very grateful to all who responded so constructively, and I shall place their responses in the library of St Andrew's house. The review team also held discussions with a variety of other interests, and commissioned research into water industry models across the world. We have listened very carefully to what has been said before reaching our conclusions.
In conducting the review, we were guided by a number of important principles. Apart from the central theme of improving democratic accountability, we also wanted to facilitate investment, promote efficiency, ensure continuity of public water supplies, protect public health and minimise disruption to the industry. The importance of these principles, and the importance of the industry for all of us in our day-to-day lives, was demonstrated only too dramatically by events in recent days in the west of Scotland.
Those events are very serious, not least in terms of the severe dislocation caused to everyday life for some 60,000 people. I can announce today that Mr. Robert Fraser, a distinguished figure in the water industry and, until recently, director of water and drainage for Borders regional council, will lead an exhaustive inquiry into the circumstances. I have asked him to address the following points: first, to review the causes, nature and extent of the disruption to public water supplies in the area served by Burncrooks water treatment works, including the impact on the vulnerable sectors of the population, food industries and other water users; secondly, to review the West of Scotland water authority's response to the incident; thirdly, to consider the lessons to be learned for the future from such an event, in particular whether advice to the public needs to be given earlier, whether better arrangements need to be made for the provision of alternative supplies of drinking water, and whether improved arrangements are required for co-ordination within and between public authorities, and with the media; and, fourthly, to report and make recommendations.
I fully understand the great public concern and the sense of irritation over this incident. I have spoken personally to both the chief executive and the chairman of West of Scotland Water today. I am glad to be able to report that contamination levels are falling steadily, and I understand that 17,000 of the 22,000 households originally affected now have clean water. I have been assured that lessons will be learned, but I shall want to look hard at Mr. Fraser' s report. Because of the urgent need to get the facts and learn the lessons, I am anxious

to have a tight but realistic timetable. Therefore, I have asked for the report to be completed by the end of March. I shall not make judgments before I see it, but if further action is required, I shall not hesitate to take it.
This episode does, nevertheless, serve to remind us that the water industry faces two immediate and major problems. The first is water purity—the stark fact being that the purity of Scottish water is far down the United Kingdom league; indeed, the three authorities in Scotland are in the bottom five when comparisons are made across the United Kingdom.
The second problem is the chronic need for investment, especially in sewerage, to meet the requirements of European directives. Although the period of local authority control is looked back on as a time when the ownership of the industry was generally acceptable, we have to accept that the infrastructure—often Victorian—was allowed to decay, and the consequences of that now mean that very great sums are required to bring the industry up to a satisfactory level. We have to consider how we can best assist the industry in its task to meet the real demands ahead.
I come now to the various options that emerged during the review. We looked carefully at a wide range of proposals for the industry. Splitting the three authorities between the 32 separate unitary authorities was quickly ruled out. It is clear that disturbing the three-authority structure would have disproportionate costs.
A leading option, however, was to seek to improve accountability by transferring responsibility for water and sewerage services to joint boards of local authorities. Joint boards can be an effective way of providing strategic services, and the water authorities undoubtedly provide a vital public service. However, the water authorities are also large businesses with massive investment requirements and just three authorities cover Scotland's 32 local authorities. I have therefore had to reject this approach. The last local government reorganisation made those options virtually impossible.
We also carefully considered the imaginative case advanced by some consultees to convert the public water authorities into private non-profit-distributing companies such as mutuals. Such bodies would be freed from the capital controls of the public sector, but at a cost. That cost would be freeing them from answerability to any democratic body. I do not believe that that is what the Scottish people want. It would be entirely outside the public sector. The industry would effectively be privatised.
A mutual would be nominally controlled by its membership, but how effective control over the boards would operate is much less clear. I am also not convinced that a mutual, monopoly water authority would be under sufficient pressure to be efficient, as all experience tells us that individual customers will not be motivated to protect their interests. Nor am I convinced that unwelcome pressures to demutualise could be avoided. In the short term, it would be very disruptive for the industry. I have therefore also had to reject that way forward.
Despite that, it is clear to me that, if the investment needs of the Scottish water industry are to be met at a cost the consumer can afford, we shall need to harness private capital and expertise, within a framework of continuing public accountability. Let me first deal with the crucial issue of accountability.
Since we launched the review, the Scottish people have given a resounding endorsement to the concept of a Scottish Parliament. Our White Paper on Scotland's Parliament made clear our concerns about the number of public bodies in Scotland being run without clear democratic oversight. It said that we saw the new Parliament as a means of bringing them under strengthened democratic accountability. Responsibility for the water and sewerage industry will pass to the Scottish Parliament. In the longer term, the Parliament may wish to look again at some of the arguments for change, but those could not and should not be options for today and tomorrow. In any event, I would expect that it will wish to allow the system to settle, and to perform, before considering any further options.
The Scottish Parliament will be able to bring the water authorities under the proper level of scrutiny that a modern democracy demands, through its oversight of the Scottish Executive. That is the best way of delivering the will of the Scottish people for their water industry to remain unambiguously in public ownership and to be clearly democratically accountable.
As well as the water authorities becoming more accountable, I wish to see them become more responsive at a local level. As part of developing local responsiveness I shall ask the water authorities to build further on their links with the local authorities and community councils in their areas, which will be helped by the community planning system we are shortly to introduce.
I also look to the water authorities to get closer to their customers and to other important local stakeholders including environmental interests. I shall very shortly issue a direction to the water authorities to review their systems for involving local interests, particularly local authorities, and to improve and strengthen those systems. I also propose to place a statutory duty on the water authorities to consult the local authorities whose electors would be affected by major decisions. That should improve the water authorities' responsiveness to the concerns of local communities.
Moreover, I can today announce new appointments to the water authority boards. Ian Preston and John Robertson, chairmen of the East and North water authorities respectively, will demit office at the end of March. I am very grateful to both of them for their good work and dedicated public service. In the East water authority, Councillor Robert Cairns will take over, and in the North, Councillor Colin Rennie. John Jameson remains chairman of the West authority. In addition to the two new chairmen, I am appointing as new members in the East authority, Councillor Jeanette Burness, Councillor Thomas Dair, David Bleiman and John Broadfoot. New members in the West authority are Councillor Gerald Carroll, Councillor David Munn and Jane McKay; and in the North authority I am appointing Nigel Hawkins as a new member. I am also reappointing a total of seven current members to the boards. Those appointments bring the number of local councillors on boards up to 16 out of the 33 members, excluding chief executives—roughly half the total. Of those 16 elected members, six are Labour councillors. I have made full details of the appointments available in the Library.
One aspect of local responsiveness that I wish to explore further is how best to help with the problems of water supply and sewerage in many of our remoter rural

areas. I have asked officials to consider whether there is a case for reintroducing rural grants to help with such problems.
As I have already said, the water industry review has again emphasised that the industry is in need of very substantial investment if the Scottish people are to have the quality of water that they deserve. That investment will have to be paid for, which, put simply, means that all water consumers will have to pay more in the years ahead. Let me be quite clear: this investment is needed to bring the quality of our water up to the standards in other parts of the country, to protect our beaches, rivers and seas, and to renew the infrastructure gifted us by previous generations, which more recent generations have neglected.
The private finance initiative is paying off by helping us to acquire additional resources to meet European Community environmental deadlines, and by identifying innovatory ways of making savings in the capital and operating cost of projects. The water authorities have substantial plans for PFI projects, amounting to some £600 million, to help meet their investment needs in the years ahead. The Government are committed to developing opportunities for public-private partnerships. I encourage the water authorities to be innovative with such partnerships while working within the framework of strengthened democratic control that I have outlined.
The Scottish people will need safeguards to ensure that money raised is well spent. There was consensus among the major consultees that the current division between price regulation by the customers council and efficiency regulation by the Scottish Office has proved untenable. I propose to create a new position of regulator responsible for all aspects of economic regulation, and for promoting the customer interest.
The water authorities will be under legitimate democratic oversight, but they are still monopolies, and the new regulator will have operational independence to ensure that the customer gets the best possible deal. The regulator will be accountable to the Scottish Parliament through the Scottish Executive. To safeguard the independence of the regulator's role, the position will be established in statute.
The functions of the current customers council will be transferred to the new unified regulator, and the council in its current form will be wound up. However, it is essential that customers continue to have a strong independent voice. I propose to develop the role of the three customers council area committees as the champion of the individual customer. Those committees in their developed form will be accountable to the new regulator, and will provide a point of contact for the public.
I have also listened carefully to representations about the damaging uncertainty for the industry of the current one-year time horizon for price and external financing limits decisions. I propose a longer-term pricing framework, and we should aim to ensure as stable a borrowing framework as possible, despite changing circumstances in successive public spending plans.
I have also listened carefully to the views expressed to us during the review about the contribution that people with business experience have made to the boards of the new public authorities, alongside councillors. As will be clear from the appointments that I have announced,


I judge it essential that we continue to draw on the expertise that the private sector can offer to ensure well-balanced and effective boards.
In sum, my proposals represent real local responsiveness, and real democratic control. They show that we have listened very carefully and thoughtfully to what has been said during our extensive consultations. We are seizing the opportunities created by the Scottish Parliament to have more democratic control of the industry, and to find the best way forward, given the particular sensitivities of the industry. We shall not play politics with Scottish water.
My proposals to change the system of regulation will require legislation, and the Government will look for an appropriate opportunity to legislate. I am publishing today a factual document that I asked the review team to prepare, which sets out in more detail the outcome of the review. Copies will be available from the Vote Office.
I commend the proposals to the House.

Mr. Michael Ancram: Rather to my surprise, I give a qualified welcome to the statement, not so much for what is in it as for what is not in it. I begin by welcoming the somewhat belated response to last week's serious incident in the west of Scotland, and the appointment of Mr. Robert Fraser to hold an inquiry. What happened last week has caused much justified concern to local residents and to local businesses, and there is an urgent need not only for rectification but for reassurance. I am sure that the appointment of Mr. Robert Fraser will help in that regard.
The statement constitutes a surprising but none the less welcome climbdown from the Labour party's former position. After the lion's roars of the right hon. Member for Hamilton, South (Mr. Robertson) when he was shadow Secretary of State for Scotland and spoke about water—and, indeed, the pledges in the manifesto—the Secretary of State has produced a mouse of a statement, and a mouse which is strangely silent.
Let me remind the Secretary of State of what was said before the election. He may recall—indeed, he reminded us today—that the manifesto contained a pledge to return Scotland's water services to local democratic control. In 1995, the Scottish Labour manifesto issued before the Scottish unitary authority elections stated:
The next Labour Government will return water to directly-elected control.
In the same year, the right hon. Member for Hamilton, South said at the Scottish Labour party conference:
I make this clear pledge to the Scottish people. On my first day in St. Andrew's House I will end this undemocratic farce. All the Water Quango Appointees—whoever they are—will be told to clear their desks"— 
and he added bravely:
and I won't take no for an answer." 
When we strip away the verbiage of today's statement, we find very little change. There is a change in the system of regulation, and in some of the membership of the authorities—although, as we have heard today, not enough to provide locally democratic control—but the three-authority structure that was so opposed by the Labour party in opposition is retained. There is no

return to directly elected or indeed local control, and there is no wholesale clearing of desks, as promised by the right hon. Member for Hamilton, South.'
I must say that I welcome this outbreak of realism—this victory for common sense over pre-election rhetoric. Conservative Members are becoming used to Labour's pre-election promises being jettisoned in government, but we would welcome the jettisoning of many more, and we certainly welcome the abandonment of one today. We also welcome the fact that the need for investment from the private sector—which was at the heart of our policy—has caused a change of mind, as the Secretary of State made clear in the small print of what he said.
I note the Secretary of State's concern about the purity of Scottish water, and his comment that the three Scottish authorities are among the bottom five in the United Kingdom league. How has Scotland fared relatively since water privatisation in England? Have the Scottish authorities gone up or down in the league? I also note the right hon. Gentleman's comment that, under public ownership and local authority control, the infrastructure was allowed to decay. Was that not because that type of control and ownership prevented private investment from being made available to repair the infrastructure? Is that not the real reason why the right hon. Gentleman has decided to proceed as he has announced today?
The right hon. Gentleman spoke of the future role of a Scottish Parliament. We await the publication of the Bill setting up such a Parliament with some anticipation, but is the right hon. Gentleman not concerned that leaving a final decision to a Scottish Parliament prolongs uncertainty, and makes less likely the vital private investment that is so urgently needed? Does he envisage a Scottish Parliament opting for an all-Scotland water authority, and would he seek to dissuade it if it sought to do so?
What criteria were applied in the replacement of the chairmen of the North and East authorities by Labour councillors? What business experience do those councillors have, particularly in the utility industries, and are their experience and expertise greater than those of the two existing chairmen? In what ways will the new chairmen be able to increase the amount of private finance being invested in the water and sewerage industry in Scotland, and what has COSLA's reaction been to the right hon. Gentleman's rejection of the mutualisation plan that it submitted?
All in all, this has been an interesting diet of past words for the right hon. Gentleman, and we have enjoyed watching him make a meal of them. We make no complaint: there is always much joy in heaven over any sinner that repents, and we welcome the Secretary of State's transition from the populist rhetoric of opposition to the economic reality of administration. Conservative Members hope that there will be many moves in that direction in the future.

Mr. Dewar: I loved the ending! I must tell the right hon. Member for Devizes (Mr. Ancram), however, that repentance of sins is one of the few areas in which I bend my knee to him.
The right hon. Gentleman mentioned the West of Scotland water authority, and I welcome his welcome. Of course I am deeply concerned about what has happened. I have not only a ministerial but a constituency


interest, as have one or two of my team colleagues. We will await the report with considerable interest, and I hope that lessons will really be learned if faults are found in the system.
As for the appointments of the two new chairmen, those two candidates—like every other candidate who was appointed—had to undergo a rigorous Nolan procedure, in which their credentials and suitability for the posts were assessed. They came through with flying colours. The work and the performance of both are known to me, and I have no hesitation in seeing a useful and distinguished role for them. I pay tribute to their predecessors, and do so with every genuineness. Both have given long service—"dedicated service" was the phrase that I used; I think that that phrase is sometimes undervalued. It was time for a change, however, and I think that the two new incumbents will do very well.
The right hon. Gentleman asked specifically about the business backgrounds of the new chairmen. If we applied that test to Ministers in any party, some interesting gaps might appear. People have the ability and the mental equipment to do certain jobs, and I am very confident about these appointments.
As for mutualisation, yes, there was some lively debate, but I think that the vast majority of the consultees came down against the proposition. I tried—within the bounds of decent length—to explain some of the reasons for that. If the right hon. Gentleman looks at the arguments, as set out both by the review body and by those who offered opinions, he will see why there were difficulties about the scheme. I have no doubt that people will continue to argue for the other point of view, but, as I stressed in my statement, I feel that a period of stability to allow the arrangements to settle in would be wise and, I hope, helpful.
I do not mind being abused for responsibility, by the right hon. Gentleman or by anyone else. As far as I am concerned, we could have a very interesting economic argument; but the industry will require some £1.5 billion by the year 2000, which means that we must attack on all fronts. The Government must do their best, of course, but private-public sector partnerships must also be brought into play. I consider that a sensible approach.
What we have here is a scheme that leaves Scottish water unambiguously in the public sector, giving it a much more durable and, in my view, effective framework and a much greater level of both democratic accountability and democratic control through its membership and through the Scottish Parliament.

Mrs. Maria Fyfe: I welcome the appointment of Jane McKay, whose experience and ability were not recognised as they ought to have been by the previous Administration. I also welcome the return to democratic and public control of the industry.
Does my right hon. Friend agree that it is a bit rich for the Opposition spokesperson to comment on these matters, given that it was bodies such as Strathclyde regional council whose campaign against water privatisation helped to retain that important industry in public hands? Had it not been for Strathclyde's vigorous campaign, Scotland might be suffering from water privatisation like the rest of the United Kingdom.

Mr. Dewar: I agree with my hon. Friend and I am grateful for her comments. To be fair, the present

Opposition spokesman on Scottish affairs was otherwise engaged, as, in a sense, I was, while those debates were taking place—he looks slightly disengaged at the moment in fact, but I would not hold that against him. The important thing is that he must live with the fact that there is a strong view in Scotland that the public sector is the proper place for the water industry. That does not mean that the public sector and, in particular, the water authorities do not have to introduce innovative and imaginative procedures that would allow them to raise standards in the way that we want. I look forward to that happening.

Mr. James Wallace: I welcome the investigation under Mr. Robert Fraser. While staying with family in Milngavie on Sunday evening, I had to suffer the deprivations of the contaminated water. Can the Secretary of State give any indication of when a normal water supply is likely to be resumed to the remaining 5,000 houses?
The hon. Member for Glasgow, Maryhill (Mrs. Fyfe) mentioned Strathclyde and the referendum that was held there. Will the Secretary of State confirm that, save exchanging a few councillors for previously non-elected personnel on the boards, he is substantially retaining the scheme that 97 per cent. of the people voted against in the referendum?.

Mr. Dewar: No.

Mr. Wallace: I think that the Secretary of State will find that the structure is substantially the same as that against which those people voted. Can he not accept that that is not local accountability? If anyone were to be found culpable for what has happened in the west of Scotland, surely he should be answerable democratically to an electorate and not—through some way—to the Secretary of State or, ultimately, to the Scottish Parliament.
I welcome the fact that the Secretary of State has said that he is to examine the rural grants, but will he accept that there is no logic in connecting the islands areas, for example, to any other part of Scotland for water, as water falls there and is self-contained? Local authorities should have greater input, so that they can take economic development and water together and we do not have another body that has a totally different responsibility. That is the argument for democratic control, which could come through joint boards, which were so lightly dismissed in his statement.
Will the Secretary of State accept that the public sector borrowing requirement is substantially for investment that is to be met by tax and here we are dealing with investment—we accept that substantial investment is needed in water—that is met from revenue from customers? Would it not make sense to take the water industry in Scotland out of the PSBR, remove it from the Secretary of State's external finance limit and allow the industry to go to the market, to raise funds there and to be subject to normal market conditions?

Mr. Dewar: I listened with interest to what the hon. and learned Member said with increasing confusion—increasing confusion seemed to be inherent and in-built in his statement. Of course, it is tempting to say,


"Take investment outwith the PSBR limits", but it is difficult to reconcile that with putting it firmly into the local government sector. We can do one or the other and it may be possible to argue for one or the other, but we cannot have our cake and eat it in the way in which he suggests.
This is not just a tinkering of personnel. Changes such as the introduction of the regulator and the demise of the customers council—the great tightening up in that area—will, I hope, increase pressure for efficiency and give a much more satisfactory regulatory machinery. We will have one regulatory individual, one regulatory force, which is involved not just in the pricing side of the argument, but in the wider strategic side—the economics of the industry. That is an important change.
Finally—well very nearly finally—I am surprised by the way in which the hon. and learned Member writes off the scrutiny of the Scottish Parliament. In his perhaps more benign moments, I think that he would accept that the intention is to produce a much more effective scrutiny machinery—given the scale of politics in Scotland—than has been possible, for example, in this distinguished House. The more immediate accessibility of the Scottish Parliament will be an important factor in that sense.
There was not a vote against the present arrangements in the referendum. The referendum was a vote on privatisation.

Mr. Wallace: It was not.

Mr. Dewar: Oh yes it was. Privatisation is certainly what the vast majority of people voted on, so I think that the hon. and learned Member is in some difficulty.
The final thing that I will say, and it is important, is that I cannot, of course, give a hard and fast answer on when the inconvenience and dislocation that have resulted from the diesel spill at Burncrooks will end, but I have said today that we understand that 17,000 of the 22,000 households now have clean water. I understand that the situation is improving rapidly, so I hope that, throughout the whole area—even in Milngavie; particularly perhaps in Milngavie—we will see a quick end to the problems.

Mr. Ernie Ross: I welcome my right hon. Friend's statement. It was cheeky for the right hon. Member for Devizes (Mr. Ancram) to talk about handing things back to local control as he gerrymandered the local authority system before the election, which makes it almost impossible to do that.
I know that people in Tayside will welcome the appointments of Councillor Colin Rennie, who—I suppose that I should declare an interest—works part time for me and my hon. Friend the Member for Dundee, East (Mr. McAllion), and who will obviously have to stop doing that from March next year, and of Nigel Hawkins, who is well known as a member of Dundee Partnership.
Much more important, I agree with my right hon. Friend's statement. I was surprised that the hon. and learned Member for Orkney and Shetland (Mr. Wallace) should have so little faith in the Scottish Parliament. Only yesterday, at the Scottish Constitutional Convention, we were talking about the new committee system. Clearly, this would fit well into that.

Mr. Dewar: I thoroughly endorse what my hon. Friend says, and I am grateful for his interest in these matters.

The change in personnel is significant. It goes beyond perhaps the individuals concerned; it is also a matter of approach on the part of the Government to the appointments and a recognition of the special situation of the water industry in Scotland. I have already chided the hon. and learned Member for Orkney and Shetland, so it would not be fair to go back to that. As I have said, I know that in other forums and on other occasions, he takes a much more enthusiastic view of what we can achieve through the Scottish Parliament. In this particular sector, I hope that much will be done. I gather that the hon. and learned Member will be a candidate, so he will see it no doubt from within; some others of us may just watch from without.

Mr. Alasdair Morgan: Can the Secretary of State explain in more detail exactly where the democratisation is, because I must admit that I thought that a page was missing from my copy of the statement? Will he explain how replacing Michael Forsyth's appointees with some of his own—from whichever party or from none—is an improvement? Surely a quango is still a quango. As regulators have so far been appointed only for privatised utilities, what message and signal does it send to the electors of Scotland that the new democratic arrangements for Scottish water need a regulator? Lastly, given that he has the support of the Conservative party, does he have no doubts at all about the democratisation of his scheme?

Mr. Dewar: I take the view that even the Conservative party may get the odd thing right if it tries long enough and works hard enough. I am sorry that the hon. Gentleman takes such a cynical view of those whose Benches—admittedly separated by the chasm of the Gangway—he shares, but may I caution him in any event: if he thought that the comments of the right hon. Member for Devizes (Mr. Ancram) amounted to a ringing endorsement, he lives in a depressed world. There is an important distinction.
When the water industry was left by the Conservative Government, clearly, it had been reluctantly halted on the brink of total privatisation. One got the impression that it was a staging post until better political times, when the job could be completed. We are now putting water unambiguously in the public sector. As I have said, we are strengthening the democratic controls and we are reconnecting in terms not just of membership, but of the statutory duty to consult, to which I have referred, with local authorities. Of course, we are also looking forward to the more immediate links that can be built with a Scottish Parliament. There is real democratic content, although I recognise it is not all that the hon. Gentleman wants in terms of the wider political settlement. However, I hope that he recognises that there are substantial and real gains.

Mr. Tam Dalyell: Paragraph 4.17 of the review report refers to
the new investment needed to meet Ministers' policies on the environment and health".
The Secretary of State will know from my hon. Friend the Member for Midlothian (Mr. Clarke) in particular and from my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs of the desperate need for investment not only in the Esk valley but in other


parts of Lothian in relation to industry and improving the environment. Has my right hon. Friend any good news for us about where the investment is likely to come from?

Mr. Dewar: I recognise the problem to which my hon. Friend refers. I think that the Esk valley scheme was directly and sensibly raised a few days ago by my hon. Friend the Member for Midlothian, so I know that there is much pressure on the issue. I spoke about an amount of £1.5 billion up to the year 2000. It is clear that substantial sums are needed, and there is about £600 million in the pipeline in the form of partnership schemes and private finance initiatives of one sort or another. If I remember rightly, the East of Scotland water authority's Esk valley project is included in the list, and the scheme is one of those that are currently in preparation. I assure my hon. Friend that there is a real commitment and that it will be reflected in the new authorities, as, to be fair, it is reflected in the present system, to try to tackle the problems as energetically and as quickly as we can.

Mr. Donald Gorrie: I have great personal confidence in Councillor Robert Cairns and my remarks in no way reflect on him.
The Secretary of State's idea of accountability is not mine. To appoint a regulator and to claim that that is some form of accountability is to take us back to colonial governorship. Surely the Secretary of State should re-examine the possibility of joint boards working effectively, whether they consist of councillors or Members of the Scottish Parliament or both. Could he not look at the issue of user democracy, which is different from the mutualisation that he has mentioned and, I understand, works in parts of the Netherlands? There are other ways to make the water industry more accountable. He should accept the point made by my hon. and learned Friend the Member for Orkney and Shetland (Mr. Wallace); capital could be found if the right hon. Gentleman merely put a pen through some of the more stupid Treasury regulations, as happens in continental countries, so that we could find the capital under a democratic system without going into this PFI rubbish.

Mr. Dewar: The hon. Gentleman uses not so much a pen as a broad brush in his approach to these problems. [Interruption.] Why not? Management of the Treasury cannot be conducted in that way. I suspect that if the Liberal Democrats had a role in power they might find that the, "Pssch, don't bother me with Treasury rules" approach would create some difficulties. There is difficulty about mutualisation, and I tried to sketch it in. I am not sure of the distinction between a mutual system and user democracy, but, under a mutual system, ownership, at least in theory, would lie with the person on whom the bill was served. There are difficulties in regarding that as effective and public control. No doubt that discussion can take place on another occasion.
I am genuinely surprised about the way in which the regulator and that change has been dismissed by Liberal Democrat Members. I do not know whether the hon. Gentleman intended it, but I got the impression that he was laying down a new Liberal Democrat policy against regulators. They will have some difficulty in explaining the virtues of that to the consumer movement.

Mr. Ian Davidson: May I welcome the good bits of the Minister's statement and express my

immense disappointment at the lack of progress in democratising Scotland's water service? To move to a system under which one man, one vote appoints 33 members to the three water authorities is not sufficient to meet the needs that have been expressed by the people of Scotland throughout long campaigns against privatisation and Tory policy. I do not understand why joint authorities are made impossible by local government reorganisation. Strathclyde police and the fire service have continued under local government reorganisation, and I can see no reason why, if COSLA and local authorities had been consulted, they could not have come up with a workable means of appointing people with an electoral mandate to run the water authorities in the public interest.
There is great difficulty in Scotland over the number of people who are accountable to no one bar the Secretary of State. If we are keen on the dequangoisation of Scotland, we ought to have started at the first available opportunity, which is with the water service. I suppose that I and many others in Scotland have to look forward to the Scottish Parliament to do the job properly. I wish that, in this appointment as in others, the Secretary of State would be more prepared to trust those who have an electoral mandate directly from the people of Scotland.

Mr. Dewar: I appreciate, of course, that my hon. Friend in his council and parliamentary career has espoused and argued that view. I do not think that it is practical. Without wishing to burden him with additional and perhaps unwelcome Christmas cheer, may I suggest to him that he reads the report and the consultation documents that were produced? If he does that, he will find, of course, that there was some discussion of joint authorities. However, I do not think that there was what could be described as a weight of opinion for that option. I think that we have struck a fair balance. It is important to have continuity in the industry. There are currently many difficult projects in train, and I regard the statement's contents as genuine progress. I hope that my hon. Friend will join me in at least seeing that as some improvement.

Mr. Roy Beggs: Looking on from Northern Ireland, I welcome the fact that the Secretary of State has established that the water industry will be in the public sector for the future. He could have gone a little further by ensuring more influence by elected representatives. Nevertheless, he has faced the problem of lack of water purity, the difficulties over sewage disposal and the need for more investment in that service. I was surprised to hear in his statement that, even with the £600 million of PFI investment, no target date has been set for water quality to be up to at least the average of other United Kingdom regions.

Mr. Dewar: I did not feel able to set that target. It will be some time before the new arrangements come into force. The regulator's new unified approach, the ability to balance the interests of the consumer in the broader sense, which includes not only the level of charges but the service that is delivered, and the pressure for greatly increased efficiency will all help.
I have a list of important PFI projects that are in the process of procurement. For example, my hon. Friend the Member for Linlithgow (Mr. Dalyell) will be interested in the Almond valley and Seafield scheme. There is a


range of such schemes, and much is happening. I am grateful to the hon. Member for East Antrim (Mr. Beggs) for his broad welcome. I agree that the settlement is based very much on public duty in the public sector and on the vital and essential place of the water industry in our everyday life.

Mr. Norman A. Godman: May I tell my right hon. Friend how welcome his words are on the public inquiry into the West of Scotland water authority? It is run by a bunch of useless incompetents. Was not it the case that they did not have a comprehensive contingency plan in place to deal with the recent emergency? In that regard, they are quite unlike the other two authorities. Those incompetent administrators recently sought to ride roughshod over serious local concerns in Gourock in connection with the building of a sewerage system. Inverclyde council changed things slightly. I hope that we shall not again see local concerns being ignored.
I, too, welcome the appointment of Jane McKay, and I share the sentiments of my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson).

Mr. Dewar: I am glad that there is a welcome for that particular appointment, but I should say that that candidate went through the same selection process as all the rest. Although the selection process can at times be a little constrictive, I welcome the fact that we now have some consistency, at least in its basic part.
I cannot join my hon. Friend in making judgments on what happened in the Burncrooks incident or in making assumptions about whether there was personal culpability or whether systems were adequate. I certainly think that it is important that hard questions are answered, and that will be the inquiry's job. Once we have the facts, perhaps we can make judgments about what is best and what lessons have to be learned.

Mr. Andrew Lansley: I am sure that the House will welcome the Secretary of State's statement that he does not intend to play politics with the water industry and will recognise in that statement a euphemism for dropping the pre-election policy and rhetoric of the Labour party, which is embracing in large measure the previous Conservative Administration's policies on the water industry's structure. Does he realise that—as in the vote on lone-parent benefits, and subject to the detail of legislation that he introduces—he can expect to receive support from the Conservative party for measures that are similar to those proposed by the previous Conservative Government?
On a point of practical detail, does the right hon. Gentleman expect that, as the PFI proceeds in the water industry, ownership of key assets in that industry will progressively transfer out of public ownership and into private ownership?

Mr. Dewar: I do not make that assumption at all. Apart from anything else, the authorities' asset base is

a matter for judgment and good sense in management. I do not take the type of ideological approach to these matters that the hon. Gentleman, by implication, wishes on me, and I am sorry that he should try to do that. His support in these matters is not necessary, and I caution Conservative Members for assuming that it would even be welcomed. He must make his own decision in this and in other cases. I should like to think that on this issue, as on many other issues, I have been admirably consistent over the years. Although often consistently wrong, I have at least been consistent.

Mr. Frank Roy: I congratulate my right hon. Friend on his statement, which will be seen by the people of Scotland as the roar of their Scottish lion—rather than as the squeak of a mouse from afar. Last night, at a public meeting in my constituency held by the Scottish water council, it was stated that there was a need for more transparency and public accountability in the water industry. Does he agree that bringing more councillors on to boards will make them more accountable, more responsive and more transparent?

Mr. Dewar: I am grateful to my hon. Friend, although I am not sure that I ever see myself as a lion. I would be a rather skinny version of the beast—although I should add that I enjoy Scotch beef.
We will keep the situation under review, and I hope that there will be a period of stability. It will be some time before we have a legislative opportunity to make some of the changes, but I very much hope that boards will be allowed to work effectively in the public interest and in the interests of everyone. I am confident that that will be the case, but we will continue to monitor and not be afraid to go further down a particular policy road to get the type of results that we all want.

Mr. Malcolm Chisholm: I welcome my right hon. Friend's statement, and particularly the very significant increase in democratic accountability for Scottish water within the public sector. Will he undertake to explain to the Scottish people the unavoidable necessity for increased water charges in the next few years? Specifically, will he explain that increases are nothing whatever to do with the use of public-private partnerships, which are absolutely essential, but arise because of the considerable backlog of under-investment inherited after 18 years of Conservative rule?

Mr. Dewar: My hon. Friend is still working from a good brief, I see. Yes, he is absolutely right: there is no painless escape from the current situation. Large sums will have to be raised, and large sums will have to be spent. That is partly a problem for the Treasury and partly a matter of partnership arrangements and the PFI approach. The consumer will bear some of the strain, and it would be dishonest if we did not recognise that that fact is built into the situation. I am grateful for my hon. Friend's realism.

School Children's Clothing and Footwear (Value Added Tax)

Mr. Tim Loughton: I beg to move,
That leave be given to bring in a Bill to provide for the zero-rating of the supply of items of clothing and footwear for use only as part of an approved school uniform.
I have sat here patiently for almost two hours listening to ministerial statements on exotic subjects from pollution and hot air to the people's sewage. Those will be difficult acts to follow, but I will give it my best shot.
I start by declaring an interest in that I have three children, all of whom are likely eventually to be wearers of school uniform. It therefore came as a surprise to me to learn—because of a campaign by a local school outfitter, in Worthing—that those uniforms may be subject to the full VAT rate of 17.5 per cent., even before my children are teenagers. It came as a surprise also to many of my colleagues who are supporting my Bill, as they were under the impression that children's clothing, and particularly school uniforms, were zero-rated for VAT. It certainly comes as a surprise to many parents, who find that they are faced with the surcharge—on usually compulsory school uniforms—at a very expensive time, when bringing up young children.
The Bill would affect literally millions of families throughout the country—thousands in each hon. Member's constituency. As such, I hope that it will receive the support of the whole House. I believe that it addresses an anomaly in VAT law that was never intended.
The problem stems from the fact that there is no definition of the term "young children" in VAT law. Consequently, VAT relief is subject to a schedule of maximum sizes for clothing and footwear that is based on the children's average size to their 14th birthday. In detail, that means that children with a size 14.5 in collar upwards or wearing jumpers with a 34 in chest upwards, trousers with a 28 in waist upwards or skirts with a 26 in waist upwards will be subject to 17.5 per cent. VAT on the value of those items of clothing.
Alas, Mr. Deputy Speaker, many schoolchildren today do not share the svelte Adonis-like proportions that you and I enjoy. It is a medical fact that children today are larger than when the so-called average figures were devised. Worse still, those outdated schedules positively discriminate against larger children, who may already be suffering from weight problems through no fault of their own. Moreover, today's fashion is to wear baggier outfits.
School outfitters are constantly faced with the absurd situation in which two children of the same age, say 13, are fitted out with the same type of uniform for the same school, and in which one child with a size 14 in collar will enjoy zero VAT on his or her uniform whereas the other, with a size 14.5 in collar—only half an inch more—will be clobbered for the full 17.5 per cent. VAT. There are worse anomalies.
One of the few reliefs is for garments that can be shown as intended to be worn only by members of organisations that cater exclusively for under 14-year-olds. In the case of school uniforms, a prominent crest or logo must be worn. Under 14 means that the relief can apply only to

private prep schools, which cater typically for children up to the age of 13. They will attract no VAT. The uniform for typical state secondary schools in my constituency, catering for 12 to 16-year-olds in Worthing and, by definition, usually for less well-off parents, will be subject to full VAT at 17.5 per cent., even when dealing with children of identical size and age.
There are other extreme cases such as that of a firm of hat producers in Nottingham. It produces bonnets for babies which can be liable for the full rate of VAT because it is possible to stretch them across the head of an adult. That is the anomaly in the law.
Last week, I visited one of the outstanding schools in my constituency—Worthing high school. The cost of a uniform at that school is as follows: a jumper is typically £16 or £16.50; a shirt is £9; skirts or trousers are £16; rugby shirts are £17; sports socks are £3.50 and shorts are £7. That adds up to at least £70 before taking account of blazers, shoes and other parts of the uniform. That is £70 or more per child, per kit, as well as the cost of replacement when the uniform wears out.
The outfitter for that school does not stock jumpers of 34 in or below simply because all the children in that school qualify as above the average size and will, therefore, be subject to VAT. There is no choice because the uniform is compulsory. Virtually all the schools in my constituency have compulsory school uniform.
I fully appreciate that the current VAT laws were fashioned to prevent adults from taking advantage of general items of school wear such as plain shirts and trousers. My Bill seeks VAT exemption on those items of school wear that are clearly identifiable as part of a recognised school uniform. I am talking about stripy jumpers made to particular specifications and often involving specially commissioned dyes, jumpers or sports kit bearing the logo or name of the school prominently, those classically dull grey or delightful maroon blazers made famous by the girls of St. Trinian's or those particularly troublesome thick, scratchy football socks guaranteed to bring the wearer a rash on the back of the ankles—I am sure that that brings back fond memories, Mr. Deputy Speaker.
As my trip to Worthing high school last week and many other schools in my constituency have confirmed, such items of school uniform are fine and are accepted for school, but by no stretch of the imagination can they be regarded as fashion accessories. No self-respecting pupil in my constituency is likely to be found strutting his or her stuff in one of Worthing's many hot night spots regaled in any of the items I have mentioned.
The law can easily be amended to exempt from VAT those elements of school uniform clearly identified with a particular local school, regardless of the age and size of the children. It could be policed by the production of a school identification card, or the uniform could be ordered through the school.
I hope that the House agrees on the benefits of a school uniform. The Prime Minister has spoken in favour on many occasions. It engenders pride in the school and a sense of identity and discipline. It has been shown that a uniform can lead to better results in schools that have taken it up. A uniform is useful against truancy, it is a good security measure against strangers coming on to school premises and it cuts down the emotional blackmail


that children use on their parents because they want the latest designer gear. It also avoids peer pressure about who is the school fashion icon.
The Bill seeks to encourage further the welcome trend back to school uniform. It seeks to correct an anomaly in VAT law which I am sure was never intended and which has placed extra burdens, particularly on the less well-off families who are already faced with the spiralling costs of bringing up young children. It seeks to help less well-off families with several children, particularly prone to wear and tear on their clothes. It seeks to address the absurd advantage implicitly given to children at private prep schools over state secondary schools from the ages of 11 or 12.
My Bill is anti-sexist, anti-agist, anti-sizeist and anti-elitist. As such, I am sure that it will find support from all corners of the House, even from the most politically correct zealots on the Government Benches. I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Tim Loughton, Mr. Oliver Letwin, Mrs. Theresa May, Mr. Keith Simpson, Mr. David Ruffley, Mr. Andrew Lansley, Mr. Peter Bottomley, Mr. Christopher Fraser, Mr. Shaun Woodward, Mr. John Hayes, Mr. David Prior and Mrs. Eleanor Laing.

SCHOOL CHILDREN'S CLOTHING AND FOOTWEAR (VALUE ADDED TAX)

Mr. Tim Loughton accordingly presented a Bill to provide for the zero-rating of the supply of items of clothing and footwear for use only as part of an approved school uniform: And the same was read the First time; and ordered to be read a Second time on Friday 6 February, and to be printed [Bill 103].

Orders of the Day — National Minimum Wage Bill

Order for Second Reading read.

Mr. Deputy Speaker (Sir Alan Haselhurst): Before I call the President of the Board of Trade I must announce to the House that Madam Speaker has decided to apply the 10-minute rule to all Back-Bench speeches throughout the debate.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mrs. Margaret Beckett): I beg to move, That the Bill be now read a Second time.
I am proud to be able to stand before the House today moving the Second Reading of the National Minimum Wage Bill. The Bill will introduce, for the first time in the United Kingdom, minimum wage protection for all workers and will begin to end the scandal of poverty pay.
This is one of the many areas of politics in which for the Opposition the debate has stood still. They continue—most of them at least—to attack even the principle, let alone the detail, of a national minimum wage as if they and not we had won both the argument and the election. Indeed, this is a good example of the stark differences between us; differences which shape a wholly different approach to Britain's competitiveness.
Increasingly in recent years, the Conservative party has argued that Britain can only and should only seek to compete by aiming to be the cheapest at all costs; aiming to be the bottom of the heap; aiming for the lowest wages and the worst working conditions to be found among our competitors. It was truly a counsel of despair.
The previous Government inherited a country long regarded, certainly since the earliest days of the industrial revolution, as the workshop of the world. Yet the underlying thrust of the policy of the previous Government was to try to turn Britain into the sweatshop, certainly of Europe if not of the world. Fortunately, undercutting the wages and working conditions of countries such as China, for example, was beyond even the previous Government, although heaven knows they tried. In the process they added to changes coming from elsewhere—to a ridiculous extent—and created endemic and high levels of insecurity across every group and profession in the country. Thanks to them, it is well understood that in today's world there is no longer any such thing as a safe job or even a secure profession. Those who thought themselves well-established in their comfortable middle years saw their personal and financial security stripped away and a Government utterly indifferent to their impact on the lives of individuals, of families or of society as a whole.
It is never possible to summarise differences in political philosophy in a sentence or two, but it certainly goes to the heart of the difference between ourselves and the Conservative party that it sought to achieve competitiveness through lowest price whereas we seek to achieve it through high quality. We profoundly believe that Britain's only route to a secure and competitive future


is to remain at the forefront of technological development, of the pursuit of innovation and indeed of quality in all the goods or services that we seek to supply, whether domestically or across the world.
It is against that background that we recognise the role that having basic and fair minimum standards, including fair minimum standards for pay, can contribute.

Mr. John Redwood: The right hon. Lady has already misled the House in her remarks. She said that all workers will be covered. There are four categories exempted in the Bill before the House so I hope that she will correct the record. Will the right hon. Lady tell the House—

Mr. Deputy Speaker: Order. The right hon. Gentleman might like to reconsider the words he used about the right hon. Lady.

Mr. Redwood: Would you like me to say that the right hon. Lady inadvertently misled the House? The right hon. Lady said that all workers will be covered, but that is not in the Bill before the House.
I want to ask a simple question. Has the right hon. Lady now resolved the conflicts with her ministerial colleagues? Is she telling the House now that every young worker, trainee or otherwise, will be covered by the Bill at a single, standard national minimum rate, or is she still undecided about whether all young workers and trainees will be covered?

Mrs. Beckett: I do not know why the right hon. Gentleman bothered to rise to make that point. Obviously, the issue of who is covered by the Bill is something to which I shall come shortly. I am sure that he is well aware that the issue of how young people will be affected is one which we have referred to the Low Pay Commission, and I shall come to that in a minute.
Labour Members support a national minimum wage, not only because it is just, but because it has the potential for real economic benefit, provided that it is set at a sensible rate. Moreover, that is not merely our view, but a view which is attracting growing support across British business and commerce.
The evidence for why we need a national minimum wage is quite clear. Despite the previous Government's assertions, having no floor at all for wages has in itself created considerable problems in the labour market. It has increased costs and pressures on the public purse and it has undermined many efficient and worthwhile companies which are at risk of losing market share as they are undercut by cowboy operators.
In consequence, we see low standards, not merely becoming the norm, but being reflected in the poor quality, or indeed the lack of any training or of development, in the work force, in levels of productivity that still lag far behind our competitors because improved productivity depends crucially on improved levels of investment, and in consequent reductions in the competitiveness of much of British industry.
We have seen welcome improvements of late, both in the statistics on unemployment and in the fact that more people are in work now than in recent years. Nevertheless, after 18 years of a Government who came to power on the slogan "Labour isn't working", we found

unemployment 50 per cent. higher than we left it in 1979, even after some 30 or so changes in the way in which it has been measured. Within that total, the number of people who have been unemployed for more than a year is almost double the figure for 1979.
Within that overall picture on employment, the link that the Conservative party claims to detect between low levels of pay and high levels of employment is discredited by much of the evidence of its record in power. Until they were abolished by the previous Government, wages councils provided minimum pay rates for the most vulnerable of our work force, who worked in industries that had a history both of low trade union representation and of low pay. Apart from the existence of the wages councils, legislation such as the fair wage resolution or schedule 11 to the Employment Rights Act 1996 ensured that workers were paid rates at least comparable to those enjoyed by similar workers in competing companies.
The previous Government systematically and step-by-step dismantled all those protections. In 1986, young people were removed from coverage by the wages council system. During the Second Reading debate on the Wages Bill 1986, the right hon. and learned Member for Rushcliffe (Mr. Clarke) explained that the then Government's aim was
to create employment opportunities especially for young people
and to create—
an efficient labour market, where there are the minimum of constraints on the rights of employers and employees to agree to offer and accept jobs on contractual terms that suit them both".—[Official Report, 11 February 1986; Vol. 91, c. 796.]
What happened? Certainly, levels of pay fell. But there is a good deal of evidence to suggest that employment among young people actually fell.
Abolition of the councils in 1993 saw earnings in those industries covered, particularly for the new entrants, fall in real terms. But employment in those sectors did not increase relative to the rest of industry. Nor indeed did low pay continue to be confined largely to those areas previously covered by wages councils. Now some 880,000 workers earn less than £2.50 an hour, which is a third of the average hourly rate. Those workers are found throughout the United Kingdom, not just in areas that have traditionally tended to be low paying. There are innumerable examples of people working long hours for a very low hourly rate.
The Low Pay Unit has examples of someone working in a chip shop in Birmingham and taking home 80p an hour, of a factory hand earning £1.22 an hour and a residential home worker earning £1.66 an hour—another example involves a sales clerk in Wrexham earning £1.12 an hour. The recently opened Trades Union Congress hotline has uncovered cases such as that of a waiter paid £12 for an eight-hour shift, during which any tips that he received were taken from him, and a cleaner working in an independent school, who was paid £40 for a 40-hour week.
The consequence of that policy, apart from insecurity and poverty among those in such low-paid work, is a massive cost to the public purse. More than £2 billion will be paid in 1997 in family credit alone to subsidise employers paying wages at those levels. The taxpayer is paying a heavy price for the previous Government's decision to remove any floor on earnings. Not only did that result in poverty wages, but a pay gap was created


between rich and poor which has grown to its largest level since the 1880s; and there has been a growth in inequality which is faster than in any other industrialised country apart from New Zealand.
Moreover, the present position is actually undermining employers who are competitive in any fair marketplace—undermining the quality of the goods and services that they can offer and damaging their competitiveness in consequence. That has been increasingly realised across British business. For example, the Business Services Association recently said:
A minimum wage would allow reputable companies to compete for business on the grounds of quality rather than price".
The Reed agency survey found that 48 per cent. of employers with fewer than 100 employees were in favour of a national minimum wage, with 27 per cent. thinking that it was a "very good" idea. Not long before the election, the private company DHL, carried out a survey among UK exporters, almost 70 per cent. of whom in their responses to the survey indicated that they were either not opposed to, or directly supportive of, a national minimum wage.
The underlying reason was quite simple. Companies that can compete internationally only on the basis of quality nevertheless almost always need a secure domestic market base. Cowboy operators who undercut that domestic market share undermine the ability to keep and compete on the quality which is essential to obtain orders in the international marketplace. Far from being an aid to British business in its international competitiveness, the lack of any standards and any basis of minimum levels of pay actually turns out to be an impediment.
The case that I have made so far is a case for having any basic standards at all, but it is important to recognise that, within those basic standards, common sense suggests that we should have a single national rate for the minimum wage. Such a wage is a key part of our strategy to enhance employability and to help those at present without jobs to move into work. It will be implemented against a background of tax and benefits reform and of a new deal to promote not just quality employment, but quality training to give people the skills and flexibility that they need to prosper in today's and tomorrow's labour market.
The combination of those policies should open up the world of work for far more people. Today, we have about 1.4 million people out of work at the same time as there are many thousands of job vacancies—particularly in the midlands, as elsewhere, where employers complain of skill shortages which damage the economy's competitiveness, as well as tending to foster inflation.
In many cases, the pay rates on offer in the labour market that we inherited from our opponents are not high enough for people to be able to move into work, and the skills and experience that the unemployed have to offer are often not suitable for the vacancies that continue to exist. We need to build a fresh ladder from welfare to work, and the minimum wage is an important rung on that ladder.
We quickly set to work on the policy. Within 90 days of the general election, we had set up the independent Low Pay Commission, chaired by Professor George Bain, to examine the case for the level at which a minimum wage might be introduced.

Mr. Redwood: Can the right hon. Lady give us some guidance on the following question? Does she think that a waitress on £3 an hour who gets free accommodation and food is better or worse off than a factory worker on £4.50 an hour who is trying to live in central London and has to meet his own expenses for accommodation and food, or a bar steward on £4 an hour in Liverpool who gets free food, but has to pay for his accommodation? Which is better off? Will any of those workers be covered by the Bill?

Mrs. Beckett: I have consistently made it clear that we have no intention of second-guessing the work of the Low Pay Commission. The comparisons that the right hon. Gentleman makes are those which the commission has been set up to address. As I said a moment ago, the commission is taking widespread evidence and those are the issues it needs to consider.

Mr. David Chidgey: I welcome the fact that the Government have established the Low Pay Commission; my party has long argued for such a body. I am, however, confused. The right hon. Lady argues that common sense leads her to believe that a national minimum wage is the right route. Why, in that case, is she not prepared to let the Low Pay Commission examine the matter and, perhaps, endorse her view?

Mrs. Beckett: I shall come back to that issue in a moment. For the hon. Gentleman to describe his party's support for a minimum wage as long held is slightly flattering. I do not, however, want to intrude on private grief. We have, of course, looked at all the issues, and we have looked carefully at the arguments about different rates of pay and different conditions and circumstances. We have, however, come to the conclusion that it would not be sensible for the Low Pay Commission to spend time examining them.

Mr. John Bercow: I am grateful to the right hon. Lady for giving way on that point. She referred to Professor George Bain. Is she aware of his statement that he would be surprised if there were not some job losses and that the question was whether those jobs would be better lost anyway? Does she agree that it would be better if low-paid jobs did not exist?

Mrs. Beckett: That is not what Professor George Bain said.

Mr. Bercow: It is on the record.

Mrs. Beckett: Yes, Professor Bain's words are on the record and I advise the hon. Gentleman to scrutinise them. I have some experience of his accuracy. I am well aware of what Professor Bain said and it was not as the hon. Gentleman represented it. Professor Bain made it clear, as we have always made it clear, that we could never say, hand on heart, that no one would ever be able to claim—


I stress the word "claim"—that in some way, levels of employment had been affected. Again, I shall come back to that point.
We set up the Low Pay Commission within 90 days of the general election. The Bill will give a statutory framework to the commission's work and if it passes through both Houses, regulations to implement the detail of Government decisions will be introduced in the year ahead.
The terms of reference that we set for the Low Pay Commission indicated that it should take full account of prevailing economic circumstances as well as the circumstances that surround the implementation of the minimum wage itself, such as the changes that we envisage in the tax and benefit system. Those terms of reference also make it clear that we believe that the minimum wage should be a single hourly rate establishing a general wage to apply across the board.
I know that the hon. Member for Eastleigh (Mr. Chidgey) was quoted—he will no doubt correct me in his speech if he was quoted inaccurately—as suggesting that this was a policy of dogma. It has nothing to do with dogma. Even the mention of the interaction between levels of a minimum wage and other aspects of the tax and benefit system makes it clear why we told the Low Pay Commission not to spend time assessing the case for regional or for sectoral rates.
The difficulties of boundary definition would be insuperable. First, we have no clearly defined and long-established regional boundaries as such in the United Kingdom. Secondly, what matters? Is it where someone works or is it where he or she lives? If we considered different regional rates, would they also interact with different sectors? Again, there would be bound to be differences and difficulties of definition which would hugely complicate the administration and, indeed, the costs of introducing a minimum wage. For companies that have employees in more than one region or individual employees who work in more than region, the complications could be enormous.
One issue that is more frequently raised is the treatment of small and growing firms. Although, understandably, there has been some anxiety among representatives of small business, not least because of the extremely distorted information they got from the Conservative party, there is now a growing acceptance even in this area of the economy of the case for a national minimum wage. That was illustrated, for example, at the 1997 conference of the Federation of Small Business where a majority of those who attended voted in favour of a national minimum wage, sensibly negotiated.

Mr. Michael Fallon: That claim has been made before. Has the right hon. Lady not read the manifesto of the Federation of Small Businesses? It says:
The Federation is in principle opposed to a statutory minimum wage.

Mrs. Beckett: I can tell the hon. Gentleman categorically that we know that the Federation of Small Businesses passed the resolution I described; that has never been disputed. Indeed, my hon. Friend the Minister for Small Firms, Trade and Industry was present in the hall, unlike Conservative party representatives, when the debate was held. There is no doubt that the federation carried such a resolution.
What is important is not only that the federation conference voted in favour of a minimum wage, sensibly negotiated, but that we have again asked the Low Pay Commission to take account of the impact on small firms when it formulates its recommendations.

Mr. David Prior: Why is there no one on the Low Pay Commission who has had first-hand experience at the sharp end of running a small business?

Mrs. Beckett: The hon. Gentleman is entirely mistaken and I suggest that he looks again at the composition and membership of the Low Pay Commission. Mr. Dewar is a well-recognised representative of the small business community. The commission is taking evidence from the small business sector and it will take account of the views of small business in its recommendations.

Mr. Ian Bruce: Will the right hon. Lady give way?

Mrs. Beckett: Is this on the same point?

Mr. Bruce: Yes. I understand that the right hon. Lady must make her own case and must, obviously, support what the Labour party has decided. I and my colleagues are, however, confused. The Government moved quickly to say that its new deal would effectively give employers a subsidy of about £2 an hour— £75 a week—to take on a long-term unemployed person. Why is it right for the Government to get people into work by giving a £2 subsidy and yet to say that they will create jobs by bringing the minimum wage upwards? I am confused. Those are both Labour party policies and they seem to contradict each other.

Mrs. Beckett: The policies do not contradict each other. I do not know whether the hon. Gentleman was present in the Chamber earlier; I do not criticise him if he was not because we all have other commitments. I have already made the point that the welfare-to-work programme is the kind of issue that the Low Pay Commission will take into account when it makes its judgment.
I remind the hon. Gentleman that it has never been intended that the welfare-to-work programme should continue in perpetuity. It is a one-off step which the Government have felt forced to take because of the previous Government's total inaction. We inherited a large-scale problem of unemployment, particularly among young people, and we thought it right to take dramatic action to deal with the problem, as we are now doing.
That point brings me to the issue of young people. We have asked the Low Pay Commission to look with particular attention at young people and specifically to consider whether there should be any special treatment for them. We do not want the legislation to provide a disincentive for young people to stay on in education and training, and that is why it is important for the commission to take evidence and carefully to assess the area.
We are, of course, well aware that there are many workers under 26 who are fully as productive as any older worker and who may have family commitments. No decision has yet been made by the Government on


those issues. We await the Low Pay Commission's recommendations on what exemptions, if any, might need to be made for young people, on whether there might be a lower minimum or minima and in what circumstances those conditions might apply. It is for that reason that we have taken limited powers in the Bill to make exceptions if the Low Pay Commission so recommends and if the Government so decide. All those matters would stand to be laid before this House in the regulations.

Mr. Barry Sheerman: I fully understand and welcome the point that my right hon. Friend is making, but there are many exploited young people in this country and many businesses that grow and thrive on that exploitation. I know that she will take that into account, but a marker must be given to the Low Pay Commission that we are concerned about the exploitation of young people.

Mrs. Beckett: I share my hon. Friend's concern about the exploitation of young people, but I know that he shares my view that exploitation of people in the work force of whatever age is damaging and should be resisted. I am mindful of the comment that is sometimes made about the dignity of work, and I share the view that it is always better, if it is at all possible, for people to be in the work force and that work can contribute to self-esteem. However, being brazenly and blatantly exploited does not contribute to anybody's self-esteem: it is damaging, undermining and engenders a high degree of cynicism.

Audrey Wise: I congratulate my right hon. Friend on introducing the Bill, but will she give an assurance that any regulations that may be made—although I hope they will not be—under clauses 3 and 4 will be brought to the House for debate and vote?

Mrs. Beckett: Of course—I can unreservedly give my hon. Friend that assurance. It would be quite wrong for an issue of such substance not to come before the House and it is the Government's intention that it should do so.
I have referred several times to the work of the Low Pay Commission. The commission includes representatives of employers and workers drawn from a range of sectors and industries. It is undertaking a wide-ranging consultation exercise to obtain views of employers, workers, interested bodies and the general public; and, on the point made by my hon. Friend the Member for Huddersfield (Mr. Sheerman), I know it has taken evidence from a number of young people. It has received a large number of written submissions and undertaken a series of visits throughout the United Kingdom to hear the views of those who seem likely to be directly affected by the legislation.
We expect the commission to report its recommendations to my right hon. Friend the Prime Minister and to me by the end of May 1998, and, following that report, we shall consider the content of the regulations to implement a national minimum wage. Those regulations will set the rate, specify the reference period and determine the method of assessing the minimum wage, including issues such as benefits in kind, to which the right hon. Member for Wokingham (Mr. Redwood) referred earlier. We have asked the Low Pay Commission to look at all these issues.
The regulations will determine the method of calculation and the make-up of the pay that can be taken into account when assessing whether the national minimum wage has been paid. We recognise that pay today can be made up of a large number of elements, including overtime, performance bonuses, benefits and allowances that are payable for particular working circumstances or which include additional payments for shiftwork, piecework or payments in kind. All those are issues which the Low Pay Commission will consider, on which it will report to us, and on which, once we have reached a decision, we shall frame regulations.
That brings me to the issue of enforcement. There is no point in having a national minimum wage that cannot be enforced, but an efficient regime needs to balance the potential burdens on business of the structure of regulation itself against the need to ensure that individuals receive their rights and are adequately protected; and that the economic as well as the social benefits we envisage flowing from a national minimum wage do indeed ensue. The Bill provides for a flexible approach to enforcement. It allows us to appoint officers to enforce the minimum wage or, if it is thought more sensible, to engage the services of officers of an existing Government Department or agency. In this respect, we are building on existing practices and procedures, given that individual workers already have the right to go to an industrial tribunal to recover wages that have been unlawfully deducted, or to a court for breach of contract.
The Bill provides powers to enable officers to levy financial penalties on employers who fail to comply with an enforcement notice. That should ensure that there is no delay in workers receiving the wages to which they are entitled. We will not tolerate those who refuse or wilfully neglect to pay a worker the minimum wage, or those who fail to keep adequate records or who keep false records. Employers who deliberately flout the law may be guilty of a criminal offence. However, we hope and believe that there will be few employers who would ever face criminal action under this legislation. Responsible companies—the vast majority, who want the cowboys who give them a bad name to be strictly dealt with—have nothing to fear and a great deal to gain.
The popularity of the national minimum wage with the general public is a triumph of decency over dogma. The Conservative party, barely engaging in the real debate about a national minimum wage, has sought from the beginning to use scare tactics as dishonest as they were scurrilous. If memory serves me, Conservative Members said at one time that 750,000 jobs would be lost if ever there was a national minimum wage. As time went on and that argument appeared not to carry weight, the figure rose to ludicrous proportions, resulting in a claim that 2 million jobs would be destroyed if any national minimum wage were introduced.
Those who have been around long enough to remember the introduction of equal pay legislation will remember a remarkably similar debate. I well recall the issue because, at the time, my mother was a trained teacher who had a family of three and an invalid husband to support. She did not receive the same pay as a man in her circumstances. We were told then that the introduction of equal pay legislation would mean that women would simply disappear from the marketplace—something which does not seem to have been a noticeable feature of recent years. In fact, women's pay in real terms and relative to men's


has increased significantly since 1975, when the Sex Discrimination Act was introduced; and between 1975 and 1997 women's participation in the labour market has increased dramatically from 60 to 72 per cent.
Of course, we can never prevent people from claiming that a national minimum wage will cause them to lay off staff, or indeed claiming it as justification for having done so. I remember that, just before the 1992 general election, a fairly major employer was quoted as having written to all its employees to say that, if they were so unwise as to vote Labour and a national minimum wage was introduced, several hundred of them would have to be laid off. Within a few weeks of that election, which resulted, as we all recall, in a Tory Government and no national minimum wage, several hundred of them were nevertheless laid off. There is nothing that we can do about that sort of claim.
However, as I hope we have made clear, there is by no means a simple relationship between the introduction of a national minimum wage and levels of or access to employment. It may be the opinion of Conservative Members that there is a simple link between the two, but the evidence does not support such a claim. Every other developed nation has some form of national minimum wage or statutory wage protection. Conservative Members claim that the existence of such policies in other countries in the EU is merely a reflection of their lack of competitiveness; but the United States, with which Conservative Members are much keener to compare us, has had a minimum wage since 1938. Employment there rose by 18 million in the 10 years to 1994. In a fairly recent example, when the state of California raised the level of its minimum wage, employment also rose. I do not suggest that there is a simple link between the raising of the minimum wage in the United States and employment rising there, as the Conservative party would try to argue if the opposite were true; I simply say that it suggests that the relationship between pay and employment is much more complicated—as are the economic effects of such a policy—than the Conservative party would wish to suggest.

Mr. Bercow: I am grateful to the President of the Board of Trade and acknowledge her generosity in giving way. Does she think that the United States is right to exempt small businesses from the national minimum wage? If she does, why does she not apply such an exemption in the United Kingdom?

Mrs. Beckett: The United States has quite a complex structure for its various minimum wages. That does not alter my point, which is that when the minimum wage there was raised, employment rose too. That completely defeats the Conservative party's argument.
Let me remind the hon. Gentleman—or inform him—of last year's OECD publication, "Annual Employment Outlook", which argued that minimum wages help to defend the social fabric of industrialised nations—not a point which the Conservative party necessarily contests—and that minimum wages do not appear to cause job losses among the most affected groups—women, young people and the unskilled.

Mr. Redwood: The right hon. Lady is generously giving way today. Was the DTI wrong to answer a question by saying that 1 million jobs would be lost if

we had a national minimum wage at half average earnings? That answer was calculated before the election by high calibre DTI staff. If she thinks that the DTI was wrong, will she publish all the forecasts of job losses that have been sent to the Department, and an independent assessment by her officials of the job consequences of the minimum wage?

Mrs. Beckett: I do not recall the precise questions quoted by the right hon. Gentleman. I do know, however, that no Government Department would make such an assessment without first being given some criteria on which to work. In all the examples ever quoted by the Conservative party, on this and many other issues, the criteria on which such calculations are made have been set by politicians, Ministers and political advisers in the Conservative party. All civil servants can do then is base their calculations on the guidance they have been given as to the background against which such judgments may be made. Given what we know about the quality of guidance given by the Tory party, there is no substance to the right hon. Gentleman's point.

Mr. Chris Pond: Can my right hon. Friend confirm that the assumption given to Treasury officials and the DTI before the election was that differentials from top to bottom would be fully restored if a minimum wage were introduced? In other words, a pay rise for a hairdresser would be replicated in percentage terms at the very top, among the fat cats. After the election, however, for no particularly good reason, these same Ministers decided to reduce the assumption to differentials being only half restored from top to bottom—another assumption with no empirical basis.

Mrs. Beckett: My hon. Friend is correct. I remember a similar example of Tory accuracy. Before the general elections of 1987 and 1992, the Tories decided that if a Labour Government were elected they would immediately increase public spending by £35 billion. On that basis, they asked the Inland Revenue to cost what that would mean if registered purely as an increase in the standard rate of income tax. That resulted in the idea of a lop increase on the standard rate of tax.
The Conservatives then went to innumerable small businesses and others asserting that it was Labour party policy to put 10p on the standard rate of tax. They stressed how much this would cost people and industries. Before the recent election, I was sent a letter written by an hon. Member—I will not name him to spare his blushes—who had turned this into a fund-raising exercise. He told small businesses in his constituency, on the basis of what he called Inland Revenue figures—they were actually dishonestly compiled by the Tory party—that a Labour Government would cost them £10,000, "so why not give a large sum to my election campaign to prevent the election of a Labour Government?"
The right hon. Member for Wokingham also asked me for an independent assessment by my officials. As he is well aware, no assessment, independent or otherwise, is possible until we have a clear idea from the Low Pay Commission of what it might recommend; thereafter, the Government will have to come to a judgment.
Secondly, the right hon. Gentleman has asked me in a press release to reveal—I hope that I am not misrepresenting him; I recognise that I am depending on


press reports—forecasts that we are supposedly suppressing. There are no such forecasts, and it is hard to imagine how the right hon. Gentleman came to think there were. I fear that they are yet another figment of his imagination.
The main issue with respect to a national minimum wage is getting the policy mix right. So long as it is set at a sensible level, taking economic circumstances into account, it can contribute to growth and job creation, while helping to tackle poverty pay and to alleviate the burden on the taxpayer.
The need for such an approach has long been recognised. When the late Winston Churchill introduced legislation in 1909 to set up the trade boards, the predecessors of the wages councils, he said:
where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer is undercut by the worst".
As a result of the former Government's policies, too many British workers still have to work excessive hours to take home a living wage.
Modern companies depend on constructive partnership with their work force. They depend on stimulating confidence and creativity because those are the principal assets enabling them to compete in the global economy, where a competitive edge is so desperately needed. A policy of a national minimum wage will contribute greatly to such developments. That policy is right, it is fair, it is just and it is sensible. It is a clear example of how a Labour Government can and will make a real difference to the lives of people across Britain, contributing to fairness and prosperity for the many, not the few. I commend the Bill to the House.

Mr. John Redwood: I am delighted that the President of the Board of Trade is in her place for once and has done us the courtesy of coming here—[Interruption.] I am about to say something nice about the right hon. Lady—hear me out. I am delighted that, for once, she has put the case for one of the many Bills that her Department is introducing. I am delighted, moreover, that she took so many interventions. It is all welcome progress for the right hon. Lady, who has been such a notable absentee—

Mrs. Beckett: I am indifferent to the rubbish that the right hon. Gentleman spouts. In all the time I have been in this House I have consistently given way to interventions. I have no qualms about taking them at all.

Mr. Redwood: I am delighted to hear it. The right hon. Lady is always courteous in that respect, as I am to her. It is nevertheless difficult to intervene when the right hon. Lady never comes here to speak in the first place. That was the problem that we faced at any rate until the past couple of weeks. It is a rare pleasure to find her here making a case.
Our disappointment is that the right hon. Lady did not answer any of the fundamental questions about the legislation. She will not tell us to whom it will apply, what the rate will be, or how this measure will tackle poor wages. The truth is that she does not know: she has

sub-contracted those problems to the Low Pay Commission, but she will not even guarantee that she will accept all the commission's advice.
No one dislikes poverty wages more than I do. It is no part of our case that we should seek to condone low wages—

Mr. Bob Blizzard: If the right hon. Gentleman does not like poverty wages, why will he not draw a line somewhere? What is a reasonable or decent wage— £2.50, £1.50 or 80p an hour? In short, what constitutes poverty pay?

Mr. Redwood: Our view is that people should be offered a minimum income, not a minimum wage. We set out what we thought that that minimum income should be in our benefit proposals and in the other proposals that we set out over the past 18 years. If the hon. Gentleman's party had done as much as the Conservative party to lift people out of poverty, those people would be a lot better off than they are today.

Ann Keen: What minimum income would the right hon. Gentleman recommend?

Mr. Redwood: I am happy to do so. The minimum income is set out in the benefit regulations, which we bequeathed to the Labour Government when we left office. We allowed family credit top-ups to those in low-paid employment, reflecting their family circumstances. There is no single minimum, as the Labour party will find out; it depends where one lives, how one lives and what one's responsibilities are. We bequeathed a sensitive system in which we had put in place additional benefits for those who needed more income.
We therefore say: minimum income yes; minimum wage no. We want every family in this country to be able to earn enough from work to lead a decent life. Of course that is our objective, and let no Labour Member deny that or say to the contrary. The Conservative party wants a prosperous country. The issue is how to achieve it. Legislation cannot create prosperity in the way that the Government naively believe; there must be a low-tax, low-regulation economy, full of enterprise and initiative so that small companies can prosper, and more and better jobs are created.

Mr. Pond: If the right hon. Gentleman is so concerned about poverty and had such well-established policies on a minimum income, will he explain why, under the regime that he represented, those registered as in poverty increased from 5 million to 14 million, and why low pay is now the single most important cause of poverty? Those are the official figures.

Mr. Redwood: That was a wild flight of fantasy from the hon. Gentleman. There are not 14 million people in poverty and we put in place benefits to ensure that everyone had the wherewithal to get food and shelter and the basics for a reasonable life, because that is what happens in a decent society. I deeply resent Labour Members implying that we did not care because we do, and we are very worried tonight that jobs will be lost as a result of this measure.

Mr. Michael Jabez Foster: Some people in my constituency work for 90p an hour. The right


hon. Gentleman said that he wants people to earn enough to get a minimum income. How many hours do my constituents need to work at 90p per hour to raise that minimum? How long a period does the right hon. Gentleman think is reasonable?

Mr. Redwood: The hon. Gentleman was not listening to what I was saying. I was saying that some wages are too low for decent family life, which is why we introduced benefits to top them up. I should like those wages to be much higher and I have suggestions on how to make them higher. That is exactly what was happening under Conservative policies—we were backing enterprise and lower taxes. The Labour party wants to put taxes up and raise people's pension contributions and tries to make people worse off through higher taxes. I am against that.

Mr. Ivor Caplin: Is the right hon. Gentleman happy about jobs in his constituency being advertised at £2 an hour?

Mr. Redwood: I challenge the hon. Gentleman to find a job in my constituency being advertised at £2 an hour.

Mr. Caplin: I have among my notes an advertisement for a job in Wokingham at £2.20 an hour.

Mr. Redwood: The hon. Gentleman has not found a job at £2 an hour. I make another promise to him—

Mr. Caplin: Will the right hon. Gentleman give way again?

Mr. Redwood: Let me answer the hon. Gentleman's question first, and perhaps he can then get himself out of the mess that he is in. The job that he mentioned at £2 an hour has gone up by 10 per cent. in two seconds. Who knows what it might be by the end of the debate?
I went to the local employment centre in Wokingham the other day—not in search of a job for myself but in search of truth about this issue. I was told that the advice given to employers was not to advertise jobs at below £4 an hour. The labour market is buoyant thanks to the outgoing Conservative Government's policies, and the advice to employers in my constituency wanting to hire more workers is to offer higher rates. I concur with that judgment. I want the same prosperity for other parts of the country as my constituency has been privileged to enjoy under a Conservative Government in recent years. I shall now allow the hon. Gentleman to redeem his foolishness.

Mr. Caplin: If there is a mess, it is of the right hon. Gentleman's making. He is the one in a hole, not me. Does it matter whether the wage is £2 or £2.20? Is he happy for his constituents to be paid £2 or £2.20 an hour?

Mr. Redwood: I have made my position clear. My advice to any constituent thinking of taking that job is that he or she could easily get a better job in Wokingham at a higher rate. That is how a market economy works.

Mr. Thomas Graham: Is the right hon. Gentleman aware that thousands of people have

lived on poverty wages for the past 18 years? They did not like working all week—40 or 60 hours a week—and then having to go with their begging bowls to the DSS. That is an absolute tragedy. The previous Government would have continued to subsidise folk to go to work. That is not what people in this country want. They want a living wage which will give them the opportunity to stop going to the Government with a begging bowl. That is how to improve the quality of life and of products in Britain. Had the previous Government realised that, Conservative Members would not be sitting where they are now.

Mr. Redwood: The hon. Gentleman is making a rather good point beneath that provocative exterior. He is saying to those who keep their jobs after this legislation has gone through that the benefit will accrue mainly to the Treasury rather than to the individuals concerned, because for every extra pound that they get from their employer they will lose a lot in benefit withdrawal. That is one of the difficulties of the scheme that the Government are putting forward: it will help the Treasury more than it will help individuals working in the private sector. It will also hit the Treasury in many other ways, however, and we shall all end up losing.

Mr. Bercow: Is my right hon. Friend aware of the research by Stewart and Swaffield, who found that between 1991 and 1993, 9.3 per cent. of the work force were on low pay but only 2 per cent. of the workers involved suffered low pay for the whole three-year period? Does that not utterly demolish the Government myth that there is a huge and permanent pool of poorly paid people in Britain? There is not.

Mr. Redwood: My hon. Friend is absolutely right. When I was a student I worked for much less, in the money of the day, than the national minimum that the Labour party now has in mind. I was happy to do so because I knew that it would not be a permanent condition. I am delighted that it was not. Many people accept jobs that are not well paid at the beginning of their careers or working lives because they live at home and do not have the same high expenses. They then gain experience and become more useful to a future employer, and go on to get better jobs. The best way to get a good job is to have had a not-so-good job and work one's way up. What the Labour party is trying to do is to kick away the ladder of opportunity for many people who wish to climb it.
We believe in the state ensuring a minimum income rather than insisting on a minimum wage. That is why, when we were in office, we introduced housing benefit, family credit and other benefits, which helped those in low-income work as well as those who were out of work. We reflected family responsibilities because we considered that important. We shall continue to support the payment of benefits to those in work if their wages are not sufficient.
If only we could legislate to ensure good wages for all without loss of jobs, but our case today is that we cannot because it will not work. The Government fear that it will not work and they are deeply divided, as we see from the leaks over the all-important detail of how wide ranging a minimum wage should be. Many young people, skilled


people and disabled people will lose their jobs or be prevented from getting a job if the wrong decisions are made and if the Bill goes through in a clumsy form.
The Labour manifesto and election campaign clearly stated that the national minimum wage would apply to everyone. That is how the President of the Board of Trade and Secretary of State for Trade and Industry wrongly began her remarks this evening. She did not suggest that any region, group or age band would be excluded. When we objected that that could prevent some young people from getting a job at all, Labour spokesmen in those broadcasts just asserted that we were wrong.
We now know that the Minister without Portfolio, who is not without influence in the Government, takes a different view, as we can see from leaked letters to colleagues and from his remarks to the Labour party conference. He thinks that the rate should be kept low and exemptions arranged to prevent too many jobs being lost. He was reported as saying that a different rate for young workers was
the right course of action".
His subsequent "clarification" still leaned heavily in favour of no single national minimum for all. His thinking merely echoes that of the Deputy Prime Minister, who in opposition let slip the following, in more vernacular language than one usually gets from the Minister without Portfolio:
And I knew the consequences"—
of the national minimum wage—
were that there'd be some shakeout, any silly fool knew that, and it was in one of our documents that that would be one of the consequences … When I made that statement"—
I continue to quote—
it was on Sky TV, it was then was told by the spin doctors that we're not saying that".
The Deputy Prime Minister went on to reveal his battle with the spin doctors—deeply intriguing. He summed up magisterially, in a way that the President of the Board of Trade would be well advised to heed:
I've said since I don't like people giving stories of sound bites, avoiding difficulties by saying 'Isn't this the easy option, there's no difficulties', you lack credibility if you don't point out some of the difficulties of some of the options you propose. That's essential for the credibility of myself"—
I speak for the Deputy Prime Minister on this occasion—
but also more important the Labour party. 
What an extraordinary confession: the Deputy Prime Minister himself says that jobs will be lost if a national minimum wage is implemented. The Deputy Prime Minister says that the Labour spin doctors were wrong to cheat the people by pretending that there were no such problems. The Deputy Prime Minister recommended that a clean breast be made of the job losses, so that Labour would be telling the public the truth. If only the right hon. Lady would follow the advice of her senior and illustrious colleague, we would have a much better debate today.

Mr. Sheerman: The Government obviously realise that the matter is complicated and are consulting, doing their homework and trying to tackle the legislation as best they can. That is better than any legislation that the previous Government produced; yet derision from the Opposition

is all the thanks that the Government get. After 18 years of legislation being pushed through the House without consultation, this legislation will be right, it will be well researched, and it will be done well. That is what the Opposition cannot stomach.

Mr. Redwood: We are trying to clarify the complexities and difficulties and to ask questions, in the hope that that will lead to better policy. We heard today from the right hon. Lady that she intends to blunder on with the policy, with no assessment of the job consequences, no knowledge of who will be covered by it, with certain exceptions already excluded in the Bill, and no view yet on what the rate should be.
The Opposition argue that Ministers should be forming a view on those matters, and should be offering the proper information for this debate and the national debate that it could lead. We would willingly help in that debate. We will debate seriously in the interests of people who want to keep their jobs, and in the interests of those who want higher pay. We are happy to do that, but unfortunately the right hon. Lady is showing her usual indecision and lack of interest in the detail of her Department, so she veers round the issue and does not answer the questions.
The right hon. Lady's first guidance to the Low Pay Commission implied that there would be no exemptions. Her subsequent letter suggested that the commission consider exempting all young people. Tonight, she began by saying that there would be no exemptions, although there are some already, then she wandered off and said that perhaps some young people could be left out. Confusion is endemic, and that is sad when so much is at stake for the people whom the Government claim that they want to help.
Today, we need answers to these crucial questions: how will wages be calculated? Who will qualify for the minimum wage, and who will be exempted? How many jobs are at risk? What will happen to differentials? Will the Treasury or the individual gain more from higher private sector pay? What will be the total cost to the taxpayer in the public sector and as a result of the possible bigger job losses? How will the health service pay for the increased pay bill? Will more money be made available? What is the level likely to be? How can we judge the Bill without knowing the main point—the rate that the Government are recommending?
First, we need to know more about the coverage of the measure. It is vital to know how young people are to be treated. Is a young person one who is under 19, or under 21? What about the wide-ranging definition offered by the right hon. Lady in her letter to the Low Pay Commission, of under 26? Are trainees to be exempted? We have heard different views expressed by Ministers. How is a trainee to be defined?
Are the disabled to receive special treatment—the Bill leaves open that possibility, as I read it—or will this heartless Government merely cut their benefits and put at risk some of their jobs? That is an important issue. My party's view is clear: do not cut the benefits for the disabled. I wish that the right hon. Lady could say the same thing.

Mr. Phil Woolas: Is the right hon. Gentleman saying that my right hon. Friend is wrong to consult? If, at this stage of the process, she


were to lay down the answers that he seeks, would not the right hon. Gentleman, rather than congratulating her, condemn her for the policy measures that she was putting forward? Does he think that it is right to consult all parts of industry or not?

Mr. Redwood: It is admirable for Governments to consult, but the usual practice is to consult first and legislate second.

Mr. Woolas: The right hon. Gentleman has conceded that he agrees with the minimum income. In light of that principle, is it not entirely honourable and correct to consult on what proportion of that income should be made up of wages? He cannot have his cake and eat it.

Mr. Redwood: I am happy for the Government to consult. They said that they believed that they could introduce a minimum wage with no job losses. We are sceptical. They should consult to get proper advice, and they should legislate, if they must, when they have finished their consultation. It is preposterous for them to present the Bill tonight with none of the crucial issues resolved, so that we cannot have a proper debate.

Mr. Stephen Hesford: Will the right hon. Gentleman accept the following statement—not from me, but from a briefing from the Confederation of British Industry, which many hon. Members have seen? It states:
The CBI believes that there is little evidence that the rates set by the Wages Councils in the 1980s and early 1990s caused job losses. A minimum wage set in line with Wages Council rates, uprated to today's prices, would be unlikely to cause significant damage but would still cover around 10 per cent. of all employees.
Does my right hon.—does the right hon. Gentleman accept that?

Mr. Redwood: I thought that I was about to become the hon. Gentleman's Friend, but he pulled back in the end. The CBI states clearly in its evidence:
Even a modest minimum, set around the £3 mark, could lead to job losses unless wage differentials are squeezed.
The CBI believes that wage differentials should not be squeezed.

Mrs. Teresa Gorman: Is not the question who should be consulted? Is my right hon. Friend aware of the Low Pay Commission's research paper, which quotes an article heading:
Pay panel dominated by Labour economists"?
Six of the nine people are university economists who have a strong Labour background, or are from the trade unions. Can we get a balanced view, when the people who provide the jobs are the business community, not the panel?

Mr. Redwood: My hon. Friend makes a powerful point. We all object to the absence from the Low Pay Commission of anyone with hands-on experience of running a small business.

Several hon. Members: rose—

Mr. Redwood: I must make progress, as many other hon. Members wish to speak in the debate.
We need to know more about the Bill's coverage, as I was saying. Are older people already in receipt of pensions to be exempted from the measure? Why did the Minister of State, the hon. Member for Makerfield (Mr. McCartney), who is present tonight, tell us that there would be no sectoral or regional exemptions, when some are already recorded in the Bill?
The Bill exempts share fishermen, some merchant seamen and charity workers. It leaves open the possibility of exempting others. Are we witnessing a titanic struggle between old Labour, who want a high minimum wage for all, with no exemptions, and new hard Labour, who do not? We still do not know which side the President is on, because she sits on the fence and hopes that she will not have to answer the questions.
Are the Government aware that in many foreign countries that have adopted minimum wage legislation, the list of exemptions has grown year by year as different groups have come to their legislators and said, "Please exempt us, because we think that it is doing more damage to job prospects than it is doing good in raising poor wages"? We have already heard a powerful exchange on the United States experience, with a much lower rate, I think, than the Government are considering—$5.15 an hour—and a raft of exemptions, including all of small business, the sector which generates most of the additional jobs in that economy and in ours.
I wonder whether Ministers are to be exempted from the legislation. We have at least two Ministers who receive no pay at all for their jobs—the Minister for Trade and Competitiveness in Europe, and the Paymaster General. In view of what we have learnt about how they have been obtaining money from offshore trusts in the past or shares or other advantages, I wonder whether it would be better if all that is owing to them were repatriated, they paid UK tax on it and we paid them a ministerial salary. I wonder whether it might be suitable to amend the Bill to ensure that Ministers receive a salary. However, in all other respects, arrangements for Ministers should remain on the same basis as for everyone else. I think that blind trusts and offshore trusts are proving problematic for the Government.
We also need to know how pay will be defined. The right hon. Lady and I had a vaguely interesting exchange a little earlier during which I think that she got into a muddle. I repeat that question. Does the right hon. Lady think that a waitress on £3 an hour with free accommodation and meals is better or worse off than a factory worker on £4.50 an hour and no extras living in central London or a bar steward on £4 an hour with free food who lives in Liverpool? The right hon. Lady said that all those issues would be examined by the Low Pay Commission and that a judgment of Solomon would be arrived at. I ask her to think again: she has ruled out the Low Pay Commission's considering any regional differences.
The right hon. Lady must surely understand—although she has a grace-and-favour residence at present—that living accommodation in central London is a lot more expensive than accommodation in Liverpool. Does that matter? Does it not mean that a particular rate of pay in London does not buy nearly as much as the same rate of


pay in Liverpool? Would it not be more sensible and sensitive to reflect that fact in the legislation that she proposes?

Mr. Woolas: rose—

Mr. Redwood: The hon. Gentleman has attempted to make several points, and I have answered all his queries. I must now make progress as other hon. Members wish to participate in the debate.
The right hon. Lady needs to tell us who will be better off and who will be covered by the legislation. Will she correct her previous answer and confirm that the Low Pay Commission cannot take account of regional differences, because she has ruled that out?

Mr. Gordon Prentice: If the right hon. Gentleman is arguing that there should be differential wages because of different costs in the regions, does that logic apply also to benefits? Should there be different rates of benefit regionally?

Mr. Redwood: To the extent that housing benefit is geared to the cost of housing, that is exactly what we have at present. This Government and the previous Government accepted the case for higher wages in London: it is called "London weighting". I find it difficult to understand the right hon. Lady's argument that it is impossible to define regionally different groups of workers who might need different levels of remuneration. The Government do that all the time when paying their workers. The right hon. Lady should rethink that issue. Is London weighting wrong and should it be abolished under the new ruling? Perhaps the Government should consider differential rates in the context of a minimum wage in order to reflect the logic that governs the way in which they pay their staff.

Barbara Follett: I thank the right hon. Gentleman, who has been generous in giving way. Does he believe that there should be differential rates for family credit? In August 1996, there were 8,000 claimants of family credit in his Wokingham constituency. According to my calculations, that represents about 12.2 per cent. of the electorate—which is a high percentage. Does the right hon. Gentleman believe that those people should have differential rates? What would he do for those family credit claimants in his constituency?

Mr. Redwood: I am rather sceptical of the figures offered by the hon. Lady. I have received no complaints about the way in which family credit is paid, and I do not think that it affects as many constituents as the hon. Lady suggests. We left behind a system that we thought was right. We applied differentials in the way that I have described that we believed adjusted, more or less, to the different pattern of costs and living expenses around the country. We now hear that the Government do not like that: they wish to treat some people much better than others according to a lottery of where they happen to live. We think that that is extremely unfair.
As we have made clear, our principal worry is job losses. The right hon. Lady did not answer properly my question about Department of Trade and Industry figures

that were produced before the election. Of course there are assumptions underlying those figures. An assumption was revealed in the question, which referred to half national average wages and half differential restoration—not full differential restoration as the hon. Member for Gravesham (Mr. Pond) would have us believe. The answer was calculated by independent officials in whom I have the utmost confidence on those sorts of issues.
If the right hon. Lady would like to offer a different set of assumptions or if she has found an error in the way in which the officials calculated the figures, I invite her to correct the figures or provide alternative figures based on her alternative assumptions. We can then debate the matter properly. It is unacceptable for the right hon. Lady to produce a piece of legislation that many in this country believe will destroy many jobs and then wash her hands of the matter by saying, "I have no idea whether any jobs will be lost. I'm not going to calculate any figures and, if there are any figures in the Department, I'll make sure that they are all suppressed."
Incidentally, hon. Members are not allowed to table questions about that issue because we are told that it is hypothetical. The previous Government did not regard it as such. This Government claim to believe in greater openness. So why is a whole serious of questions—which are very germane to an important policy pledge by the Government—blocked off when the previous Government were happy for that and similar issues to be out in the open?

Judy Mallaber: Did the right hon. Gentleman believe that the introduction of equal pay legislation would lead to job losses? Does he have any evidence that it did so?

Mr. Redwood: The hon. Lady will find no remarks by me about that subject on the record, so I am afraid that her point is not well made. She did not supply a quotation by me on that subject because she could not find an embarrassing one.
Professor Bain warned of job losses, and that danger is reflected in the testimony and evidence coming from industry after industry—to which my hon. Friend, the hon. Member for Sevenoaks (Mr. Fallon) hopes to refer if he catches the eye of the Chair later in the debate. The right hon. Lady claims that the Low Pay Commission has all the wisdom and that, in due course, it will arrive at the right answers. However, she will not tell us whether she will endorse the Low Pay Commission's findings or whether she will overturn its advice. That implies that the right hon. Lady has a view on what those answers will be.
If the right hon. Lady were entirely independent and had no knowledge about what the Government should do, she could tell us tonight that she will accept all the recommendations offered by that group of wise men and women whom she has assembled at the Low Pay Commission. Her reluctance to do so shows that there are limits on their decisions. Would it not be better for the right hon. Lady to tell the House and the Low Pay Commission tonight what limits apply to its considerations so that it is not put in the embarrassing position of supplying advice that she is unable to accept?
If we look at the bigger picture, we can see that Labour is bad for business. The policies that it espouses will destroy jobs. The right hon. Lady's policy on the brewing industry has already lost 1,500 jobs directly, as one of the chief executives in that industry recently put on record. Many more jobs will be lost in manufacturing and exporting.

Mrs. Beckett: I remind the right hon. Gentleman that every commentator, apart from the gentleman to whom he referred, suggested that, for good or ill, if I had made a different decision, twice as many jobs would have been lost. No one—apart from the individual whom the right hon. Gentleman quotes—suggested that the impact on employment would have been different and that no jobs would have been lost if I had made a different decision.

Mr. Redwood: The fact remains that the person who said that was the one who had to sign the redundancy notices—he took a very dim view of the right hon. Lady's decision.
Other people have provided some interesting testimony on that subject. Mr. Michael Hindley, Labour MEP for Lancashire South, adopts a global perspective. He says that the single currency will lead to actual cuts in wages and he strongly attacks the Government's policy of backing what he calls the "corporatist liberal-democratic state" as viewed through Brussels. He believes that the Government's economic and constitutional policies will lead not to higher wages, but to lower wages.
I see the right hon. Lady frowning—she obviously does not agree with that view expressed by a senior Labour figure. I suspect that she is also not happy with Mr. Tim Pendry from Labour Reform. He makes it clear that the speeches made at the Labour party conference were "triumphs of mental vacuity"—many Conservatives would agree with that wise judgment. He goes on to say that he thinks that the Government will let down the values that the left believes in, and that he is prepared to split the party if necessary because he has no faith in those on the Government Front Bench. [Interruption.] The Conservative party is extremely happy under its new leadership, and we know exactly what we think about these issues. It was the Labour party displaying the splits last week—and I think that there are plenty more where they came from. We have seen that again today, and I trust that we shall see it during this evening's debate. Many Labour figures feel that it would be wrong to exempt any group, and wrong also to have anything other than a high national minimum wage, and never mind the consequences. They think that the issue of decency is more important than that of full employment. I happen not to agree with that position, but I understand it. It is a reasonable socialist position for Labour Members to advance.
Others, perhaps including the right hon. Lady and certainly the Minister Without Portfolio, believe that it would be wrong to take action that could damage job prospects and destroy opportunity when the Government are making so much about the need for people to get any sort of job so as to get off benefit. They are saying, in other words, that such action should not take place. It is clear that the split will become worse. The right hon. Lady was unable to answer any of my questions because the split is already so lethal to her party.
A national minimum wage in the private sector, apart from destroying jobs, will help the Treasury rather more than those who are in employment. I pray in aid none other than the Secretary of State for Health, who says:
The national minimum wage will help to reduce the £4 billion which taxpayers must contribute towards benefits that make up, in part at least, for the low wages paid by the worst employers."—[Official Report, 15 May 1997; Vol. 294, c. 264.]
Exactly. Much of the benefit will go to the Treasury on that account, but the Treasury has an unspecified and huge bill in respect of public sector wages, and worse still as a result of redundancies and lost jobs.
We want some answers. We want more jobs, not fewer. We want a proper enterprise economy. We also want decent living standards by backing that enterprise economy. I urge my right hon. and hon. Friends to oppose the Bill.

Mr. David Maclean: On a point of order, Mr. Deputy Speaker. This is a rather distressing point of order. We are led to understand that, since the debate commenced this afternoon, the police have issued a warrant for the arrest of a Member on one of the most grave charges that exists—attempting to pervert the course of justice.
Have you, Mr. Deputy Speaker, received any indication from the Leader of the House about whether she will make a short statement at 7 o'clock on the position of the hon. Member for Glasgow, Govan (Mr. Sarwar), including what rights and interests he still has in this place? Will the right hon. Lady clarify the situation? Is the hon. Gentleman entitled to attend the House although a warrant has been issued for his arrest, if he is given bail? I think that the House needs the hon. Gentleman's position to be clarified. We need to know what the situation is with the hon. Member for Govan.

Mr. Deputy Speaker (Mr. Michael Lord): I have received no indication that such a statement is to be made.

Mr. Tom Pendry: I am pleased to have the opportunity to contribute to an important debate—indeed, it will affect hundreds of thousands of workers. I am pleased also to see my hon. Friend the Member for Gravesham (Mr. Pond) in his place. I hope that he will be able to catch your eye, Mr. Deputy Speaker, in the light of his 17 years of service in the Low Pay Unit and especially his time as national director. That background signifies his belief in the importance of the issue that is before us.
Before I came to the House, I was a full-time official of the National Union of Public Employees, which represented low-paid workers in the national health service and local government. It was always that union's policy to campaign for a national minimum wage. I was happy to be engaged in that fight for decent wages for the union's members.
It was indeed a fight, as some of my hon. Friends know. The union's policy was not that of the Trades Union Congress or the Labour party at that time. Happily, the union's campaign has borne fruit. Its policy is now that of the TUC and the Labour party, and here we are on the Floor of the House discussing a Government Bill that will soon, we hope, be secured as an Act. The measure will reduce the inequalities in the wages system.
During my time in this place, I have raised the problems of low pay, especially in the Greater Manchester area. I was able to highlight some of the low-wage problems in the area thanks to the magnificent work of the local low pay unit as far back as 1974, when a debate on low pay took place in the House. I referred to the shocking discrepancy between the rate of pay of the average worker in my constituency and the rate in the rest of the country; to low-wage earners in the north-west and to rates in the south-east.
Little has changed since those times. Average gross weekly earnings in Stalybridge and Hyde are now £308.40; in the rest of England and Wales they are £370.70. I am pleased that my right hon. Friend the President of the Board of Trade clearly spelt out that the Bill is about a national minimum wage with no regional exemptions, no special sector rates and no derogations for companies.
I am not suggesting that the Bill is perfect. I am sure that others will join me in taking that view. I know that Gabrielle Cox, the co-ordinator of the Greater Manchester low pay unit, is concerned about one or two issues, including the possibility that under-25s might be paid a lower rate merely because of their age. In addition, there is no clause that states that the minimum wage will be uprated annually. There is no specific commitment to an overtime rate after a specified number of hours. However, this is still a good Bill. I have no doubt that the issues raised by the Greater Manchester low pay unit will be aired in Committee.
I wish especially to refer to the problems in the fastest growing sector in the economy—tourism, leisure and hospitality. For about five years, until the general election, I was the Opposition spokesman on sport and tourism—as the House knows. I was concerned about the low pay in that sector, especially hospitality. With that in mind, with my right hon. Friend the Member for Copeland (Dr. Cunningham), who is now the Minister of Agriculture, Fisheries and Food, I persuaded my right hon. Friend the Prime Minister, when Leader of the Opposition, specifically to pledge a place on the Low Pay Commission for a representative of the tourism and hospitality industries. That person, in the form of Stephanie Monk of the Granada group, is a capable voice on the commission for those industries.
While giving the Government due credit for honouring their pledge, perhaps I may say how commendable it is that within 90 days of taking office they established the Low Pay Commission. Today, we have a Bill to discuss which, when enacted, will give much comfort and relief to many low-paid workers. Of course, the level at which the minimum wage is set must be sustainable, but that must not be any reason for appeasing the worst of employers, all of whom would be willing to accept the barest increase.

Mrs. Virginia Bottomley: Will the hon. Gentleman give way?

Mr. Pendry: I shall not give way because of the shortage of time.
I am pleased that in the tourism sector most employers have welcomed the Government's proposals. Peter Moore, the managing director of Center Pares and a member of the

English tourist board, has publicly stated that paying low wages in the service sector is a "false economy". Michael Jolly, the chief executive of the Tussauds group, is also a proponent of a minimum wage. David Quarmby, the chairman of the English tourist board and the British Tourist Authority, also believes that the time has come for a sensible minimum wage to be introduced.
Others in the industry think likewise—such as Garry Hawkes, the chief executive of Gardner Merchant and president of the British Hospitality Association. He referred to a survey that showed that 84 per cent. of hospitality staff and, more important, 65 per cent. of their employers, support a statutory minimum wage. Mr. Hawkes went on to say:
This is not about altruism—it makes sound business sense to pay high wages because I get good quality, highly motivated people".
Gary Crossley, in an editorial comment in Caterer and Hotelkeeper, stated:
Employers that are worried about staff shortages yet are unable or unwilling to increase basic rates of pay would benefit from taking a closer look at what the more enlightened employers say about pay and related awards. Doing nothing could cost you the best staff and hurt you professionally in the long run.
These comments come from people at the sharp end of the industry, which in the past has been described—by one of my hon. Friends, among others, but wrongly—as a Mickey Mouse industry. When the Bill becomes law, that will be seen as an inaccurate description.
There are those in tourism who are still not convinced of that to which I have drawn attention. They should look to New Zealand, for example, following implementation of a minimum wage. The effect on travel and tourism was almost immediate. Its introduction increased the status of the service sector and there was increased investment in remuneration and training of the work force. Levels of productivity and customer awareness have also increased.
Low pay in the tourism industry is probably best summed up by the English tourist board, which states:
A well remunerated, well motivated and well trained workforce is of key importance in achieving the level and consistency of quality of service necessary to compete successfully in today's competitive markets.
It seems that the tourism industry, long seen by many as a bad payer, recognises that to compete with our major competitors to maintain and improve its global position it has to create a wages and conditions structure that will assist in that endeavour. By backing the Government's minimum wage policy, it will be able to do just that.
My earnest desire is to see the public employees I used to represent in local government and the health service improve their lot. I want the same for people in my constituency who work in the tourism and hospitality sectors, such as the 23-year-old woman working as a waitress and bar worker earning £1.60 an hour after one year's service, the 27-year-old male waiter earning £2.92 an hour—the wages council rate in 1993 when it was abolished—and the 32-year-old kitchen porter earning £2.50. There are many more like them.
As from the autumn of last year, no fewer than 1,500,000 of the 2,300,000 employees in the north-west were earning less than £4 per hour. That is the scale of the problem we are discussing. When the Bill is passed, as surely it will be, I hope that for these people, in the words of our campaigning song, things can only get better.

Mr. David Chidgey: The key issues that we should debate tonight are as follows. Do the Government's proposals start to address the injustice of poverty wages, which are trapping millions in benefit dependency, and the ever widening gap between the rich and the poor? Do they tackle the lack of regulation that allows cowboy employers to undercut competitors by paying poverty wages, topped up by benefits at the expense of the taxpayer? Do they provide a route for legislation to put a floor under poverty wages without running the risk of creating instability in local and regional economies and job markets?
In that final area, the Government's proposals are deficient. They appear to be refusing to consult on the dangers that many people consider inherent in imposing a rigid and inflexible national minimum wage.
We welcome the Government's decision to set up a Low Pay Commission. The Liberal Democrats have argued for some time—certainly far longer than the Labour party—that a Low Pay Commission should be set up. We welcome the concept of its having statutory powers and being able to act independently of government. Although the Government have recognised the good sense of setting up a Low Pay Commission, they seem to insist on handcuffing it to the masthead of a rigid national minimum wage.
The Government have excluded examination of regional variations from the Low Pay Commission's deliberations—for all sorts of reasons. If they are so confident in their argument, surely they would welcome an independent endorsement from the Low Pay Commission. What are they afraid of?
There are some proposals that we welcome. The Liberal Democrats have long believed that part-time and home workers should be protected in a similar manner to full-time employees and we welcome the part of the Bill that deals with that. We believe that that protection should apply in particular to women, who form the largest proportion of workers who suffer from poverty wages.
However, there seems to be an air of confusion about the Government's proposals for excluding workers under 26. Although there is a case for paying workers who are undergoing subsidised training less, there is no case for paying those who are just as productive as their peers less because they happen to be younger. The abiding principle, surely, should be that equal work deserves equal pay.
The case for putting a floor under poverty wages is clear. The scourge of low pay exists in every corner of the United Kingdom. More than 5 million people earn less than £4 an hour. Of those, nearly 3.5 million earn less than £3.50 an hour and close to 2 million earn less than £3 an hour. Britain is the low pay capital of Europe. The Organisation for Economic Co-operation and Development reports that while in most European cities around 13 per cent. of employees are on low pay, in the United Kingdom the figure is 20 per cent. That is not a record of success; it is a shameful record of economic failure.

Mr. Fallon: If the hon. Gentleman is saying that Britain is the low-pay capital of the world, is it the Liberal Democrats' position that rates in Cornwall should be even lower?

Mr. Chidgey: May I correct the hon. Gentleman? I said Europe, but I take his point. That is why we are

putting the argument as strongly as we possibly can to persuade the Government to consider regional variations throughout our economy and to take account of them in the Low Pay Commission's deliberations.
During the past 25 years, the gap between the rich and the poor has grown dramatically. It is now greater than at any time at least since the second world war. The gap is continuing to grow—faster than in almost every other industrialised country.
The Rowntree inquiry on income and wealth found that the wages of the lowest paid 10 per cent. of men in the 1990s were lower in real terms than they had been in 1975. Between 1979 and 1990, income growth for the richest family type—childless couples—was three times that of the poorest, the lone parent families. One in five of the population now live in households with less than half the average income. One in four children live in poverty.
Hon. Members will know only too well the effects of wage poverty, which we see every week in our constituency surgeries—people trapped in poverty, living in squalid housing, struggling to survive on benefits, yet unable to escape into work that pays enough to lift them out of the benefit trap. It does not affect just lone parents and those with low skills. The recession under the previous Government has left tens of thousands of casualties: people whose jobs disappeared and people whose homes were repossessed, leaving them with massive negative equity and the misery of a life on benefits.
I shall give just one example—I am sure that hon. Members will have many others in mind. My constituent, Mr. Taylor, in Eastleigh, was paid £36,000 a year—a good salary—as a financial services adviser. He is in his 30s, is happily married with four children and lived in his own three-bedroom home. That was before his job disappeared, before his home was repossessed and before he was left with negative equity of £33,000, forcing him into bankruptcy and the trauma of moving his family into two rooms in a hostel for the homeless—but not with the family pets, of course, because they are not allowed in hostels. Try explaining to the children why their pet dog and cat cannot come with them and have to be put down. That was Mr. Taylor's lowest point.
Mr. Taylor did not give up. He is a worker—a trier. After six months, he found a full-time job as a night security guard. Working up to 16-hour shifts at a rate of £3 an hour, he managed to bring home £157 a week to support a family of four children—but of course it does not, and his entitlement in income support and housing benefit added another £150; just about the same as he brought home in pay.
As hon. Members will know, there are tens of thousands of families like Mr. Taylor's who are caught in the poverty trap. The cost to the taxpayer for family credit, income support, housing and council tax benefits is running at almost £3 billion per year. Every taxpayer is paying the equivalent of £120 a year to subsidise low-pay employers. It cannot be right for cowboy firms to pay poverty wages, knowing that they will be topped up by state benefits at the expense of the taxpayer.
The case for tackling the injustice of poverty wages and reducing the burden on the taxpayer is clear. The Government are right to seek to introduce regulation to put a floor under poverty wages. Without regulation,


cowboy firms will continue to pay poverty wages and undercut the cost of their competitors. Without regulation, millions will find no escape from the poverty trap and the taxpayer will continue to pick up the bill.

Mr. Prior: Will the hon. Gentleman please tell the House what he thinks the minimum floor should be?

Mr. Chidgey: The whole point of the Low Pay Commission is to assess independently those minimum rates. I thank the hon. Gentleman for giving me the opportunity to emphasise that to those of his hon. Friends who do not fully grasp what the Bill seeks to achieve.
The classic example of the effect of removing low pay protection came after the Conservative party's abolition of the wages councils in 1993. We were told that their abolition would create jobs. A year before their abolition, 17,800 new jobs were created in wages council sectors; the year after their abolition, only 5,000 jobs were created. Average wages grew only 1.7 per cent. in the wages council sectors, compared with a 3 per cent. rise in the non-wages council sectors. In the hotel sector, wages have fallen in real terms since 1993. The wages of women workers in particular have fallen the most and they are now £180 a year worse off.
It is clear that the minimum wage rates established by wages councils revealed no evidence of job losses or an increase in unemployment. The United Kingdom—

Mr. Damian Green: Will the hon. Gentleman give way?

Mr. Chidgey: No, I have already given way many times.
The United Kingdom is the only country in western Europe without some form of minimum wage protection. In many countries, minimum wage rates are flexible by sector or region, and where they are flexible there is little or no evidence that they impact on wage inflation or unemployment.
The experience in America has already been mentioned. Time is short, so I shall not repeat it, but it is clear from research there that there is no evidence that a minimum wage rate has led to an increase in unemployment. In six out of seven studies undertaken in regions as diverse as New Jersey, Texas and California, employment in the low wages sector increased—in one case by as much as 20 per cent. More than 100 eminent American economists have given strong support to a fair minimum wage. They specifically reject the argument that jobs will be lost. They conclude that a fair minimum wage has a positive effect on the market, on workers and on the economy.
The key factor is the level at which the rate is set and whether regional variations are necessary to avoid the risk of destabilising local economies. The Government are right to establish the independent statutory Low Pay Commission, but they are wrong to exclude the analysis of regional variation from its terms of reference, turning down the request of the commission chairman himself.
There is a clear case for regulation to attack the growing gap between the rich and the poor; to stamp out cowboy firms paying low wages, knowing that they will

be topped up by benefits at the taxpayers' expense; and to put a floor under poverty wages, providing minimum wage protection, not just for full-time workers but for part-time workers, home workers and, in particular, for women.
Ignoring the widespread and genuine concern that a national minimum wage, rigidly imposed, will destabilise the economies in our poorest regions smacks of arrogance or dogma. The Government claim that there is no significant variation across the regions in the proportion of workers on low pay. If they are so sure, why will not they release their data to the Low Pay Commission and let it review the case independently?
It is important to take account of concerns raised about rigid national minimum wage rates. Warwick university's analysis of regional variations in pay and the cost of living caused it to come out strongly in favour of regionally varied minimum wages. It found that a surprisingly high number would be affected by a national minimum wage. As many as 25 per cent. of workers in some areas would be affected by a minimum wage of £3.50.

Mr. Blizzard: Will the hon. Gentleman give way?

Mr. Chidgey: No, I must press on.
A national minimum wage as low as £3 would still affect 10 per cent. of workers. The Warwick university study was particularly concerned about the threat to youth unemployment if training costs of younger workers were not accommodated—a point which the Government appear to concede. The study also found that in small firms a national minimum wage of £4 would increase staff costs by as much as 18 per cent. in some areas, whereas in London staff costs would increase by only 7 per cent.
If hon. Members are not prepared to accept the economists' figures, let us consider the TUC's analysis. It found that 2.5 million full-time workers earn less than £4 an hour and that 1.5 million earn less than £3.50 an hour. Its figures show that around 7 per cent. of full-time workers in the south-east earn less than £4 an hour, but that across the other regions the figure was 14 per cent.—twice as high as in the south-east.
If hon. Members are not happy with the TUC figures, they can consider the data provided in answer to my parliamentary questions, the accuracy of which surely no one would doubt. According to the new earnings survey data provided by the Office for National Statistics, about 6.4 per cent. of full-time workers in the United Kingdom earn less than £3.50 an hour, which is close to the TUC's figure of 1.5 million.
The ONS figures show that, in the south-east, twice as many workers as in London earn less than £3.50 an hour. In Wales, the west midlands and Yorkshire and Humberside, the figure is three times as high. In the north-east, it is 3.5 times as high. One has to conclude that there is more than a suspicion of a regional variation in those wage rates.
Anyone who is still not convinced has only to look at the differences between the lowest rates of pay in Government Departments in London and in the regions. Answers to my parliamentary questions show that, for 11 Departments, the average lowest rate of pay in the regions is £3.50—in the Department of the Environment, Transport and the Regions, it is £3.25—yet the average lowest rate of pay in London is £4.30. In the Ministry of


Defence it is £4.03. In 11 Departments, the lowest average rate of pay in London is 25 per cent. higher than in the regions. In some cases, the difference is more than a third. Those differences clearly reflect differences in living costs between London and the regions. Moreover, with seven out of 11 Departments paying the lowest rate of less than £3.50 an hour, the Government are a low pay employer. I trust that the Government will exercise their mind on that.
From the economists' studies, the TUC reports and the Government's own pay structure, it is difficult to see how a rigid national minimum wage can lift all the low paid out of poverty without creating instability in the poorer regions where living costs are less—unless the Department of Trade and Industry has some extensive research that proves beyond doubt the Government's claim that a regionally varied national minimum wage is unnecessary. If they have and if they are so confident that regional variation is unnecessary, why did not they give the data to the chairman of the Low Pay Commission for him to consider? Why, instead, did they issue a blanket prohibition?
Why, when I asked the DTI what representations had been made to the Low Pay Commission for the introduction of a regionally varied minimum wage, did I receive a reply stating:
The Low Pay Commission is an independent body. The representations it receives are a matter for the Commission."— [Official Report, 2 December 1997; Vol. 302, c. 163.]
Why did I receive that reply when the DTI was clearly restricting its inquiries? Is that the mark of a Government committed to consulting before breakfast, before lunch and before dinner? Or is this a Government still driven by dogma, but now fuelled by arrogance?
The Liberal Democrats support moves to put a floor under poverty wages, moves to tackle the growing gap between the rich and the poor and efforts to curb rogue firms paying poverty wages subsidised by the taxpayer, but we believe that the Government are throwing caution and flexibility to the winds by refusing to allow the Low Pay Commission to test regional variations in low pay. In due course, we shall seek to amend the Bill, but in the meantime we reserve our position on Third Reading.

Mr. Peter L. Pike: I am pleased to have the chance to speak in this debate, because the Bill is very important and long overdue. The regional low pay statistics published by the labour force survey in spring 1997 show that in the north-west, excluding Greater Manchester and Merseyside, one in 24 employees earn less than £2.49 an hour; one in 13 earn less than £2.99 per hour; one in six earn less than £3.49; and one in four earn less than £3.99. The figures for my constituency are far worse than that: north-east Lancashire is an extremely low-paid area. Many of my constituents receive appalling levels of poverty pay, and it is time that something was done about it.
That poverty pay is reflected across the economic spectrum in Burnley. House prices are low, the house market is sluggish, and trade in the shops is at a lower level than in areas of greater prosperity.
The right hon. Member for Wokingham (Mr. Redwood) accepted the principle of a minimum income, but was not prepared to say what the minimum level of pay should be.

I have discussed the issue with representatives of industries in my constituency. They ask why decent employers who pay their work force a good wage must compete with employers who pay poverty wages. Not only must they compete with employers who pay unrealistic and unfair wages, but they subsidise those wages through their taxes, which pay for family credit and housing benefit for those on low pay.

Mr. Bercow: Will the hon. Gentleman give way?

Mr. Pike: I shall give way to the hon. Gentleman, as long as he is quick.

Mr. Bercow: I am grateful to the hon. Gentleman for giving way. Does he believe that young people should be entitled to receive the full, national minimum wage?

Mr. Pike: I shall come to that later, but I want to make a few other points first.
Given the low pay and poverty in my area, the council has an anti-poverty officer, Steve Watson, who has written to me to make a number of points. He says:
The Minimum Wage needs to be set at a level which offers a reasonable return for labour, helping people out of the poverty and benefit trap".
That is extremely important. The Chancellor, in his green Budget, referred to the need to eliminate the conflict between benefits and tax. Some people who go into work lose out, and that will still occur to some extent, whatever level of minimum wage the commission sets.
It was nonsense for the right hon. Member for Wokingham to slam the commission. It is right to introduce the legislation now, alongside the work of the commission. If we were not carrying out consultation, we would be attacked and criticised.
There is no justification for or advantage in regional or age variations. Clause 3 provides that those aged under 26 may be excluded. If that provision is implemented, there must be adequate job protection to ensure that young people who are about to reach that age are not suddenly thrown out of work. I have grave doubts about the need for an age differential, and in any case I think that 26 is too high. We shall see what the commission recommends in due course, and it is sensible to include that option in the Bill.
On regional variations, we should try to eliminate the differences between the more prosperous and the poorer areas. I accept that we shall not eliminate those differences overnight, particularly in London, but London weighting need not be affected by the national minimum wage. Employers in London will be able to pay the national minimum wage and London weighting so as to attract staff. People do not have to start on the minimum level: we are fixing not a normal wage, but a wage that should be used as a base.
When wages councils were abolished, pay levels in Blackpool, which had not previously been at the bottom, immediately dropped to the lowest in Lancashire. Many people in the hotel and catering trade had been protected by wages councils, and their pay dropped as soon as the councils were abolished.
Burnley borough council, supported by the North West and North Wales Anti-Poverty Forum, of which it is a member, believes that there should be an annual uprating. One of the problems in the United States is that its minimum wage is not annually uprated. It has been uprated in the past 12 months, but it was a long time before that was done. Our national minimum wage must keep up with the rate of inflation, and should not be allowed to fall behind.
We should provide adequate powers and sanctions to ensure that this measure is enforced. Too often in the past, wages council decisions were not enforced. I introduced a ten-minute Bill, which, like most such Bills, fell by the wayside. It proposed local publicity, so that everyone would know which employers were not paying the wages council level. We must ensure that employers cannot avoid paying the national minimum wage.
My union, the General, Municipal, Boilermakers and Allied Trades Union, is a long-time supporter of a national minimum wage. I was a shop steward before I became a Member of Parliament. My pay was based on a number of factors, because I worked a continental shift system. I changed shift every three days, and my basic pay was very different from my take-home pay.
We must ensure that the national minimum wage is uprated, enforced and fair. This is an important step towards a fairer and better society, and I support the Bill 100 per cent. I know that other hon. Members want to speak, so I shall not delay the House any longer.

Mr. David Willetts: The earlier exchange between the President of the Board of Trade and the hon. Member for Gravesham (Mr. Pond) was very revealing. They discussed the extent to which the national minimum wage will lead to job losses. The right hon. Lady correctly said that it depended on what criteria were used for the calculations. The hon. Gentleman, who has studied this subject carefully for many years, rightly said that the most important criterion was differentials. If we assume the restoration of half differentials with a minimum wage of £3.50 an hour, we get the figure of 800,000 job losses. If we assume much lower effects on differentials, we get a lower figure. Lord Healey was right on this subject, when he said in 1994:
Don't kid yourselves. The minimum wage is something on which the unions will build differentials. Therefore the minimum wage becomes the floor on which you erect a new tower.
In order to claim that there will be no significant impact on jobs, the Government must also claim that there will be no significant impact on differentials. If they can say that they do not believe that there will be an impact on differentials, they can come up with a low figure. I do not consider that claim plausible—but not only is it wildly implausible; it sits very oddly with what I hear from the Secretary of State for Education and Employment in my role as Opposition employment spokesman. I hear members of the ministerial team say all the time that they want to encourage people to obtain more qualifications, to go out and be trained. What argument do they use?

They say that those people will receive better pay as a reward for staying at college and securing that City and Guilds or national vocational qualification.

Judy Mallaber: Will the hon. Gentleman give way?

Mr. Willetts: I will give way once.

Judy Mallaber: Is the hon. Gentleman arguing that differentials will be increased because they will be restored across industries? Is he suggesting that a skilled engineer will retain the differential between him and a poorly paid hotel worker in the tourism industry, or does he accept that anything to do with differentials is more likely to take place within an industry? We are talking about whole industries in which there is low pay.

Mr. Willetts: I accept that the main effect is within individual industries. Let us take the example that the hon. Lady has given—the catering industry. Let us suppose that an untrained person is working as a kitchen assistant earning £3 an hour, which perhaps goes up to £4 an hour. The person working alongside him, who has a City and Guilds qualification in catering, currently earns £4 an hour. Will that person accept that there was no point in his obtaining a City and Guilds qualification, and that he might as well be untrained? If the Government want to encourage people to go out and obtain City and Guilds or national vocational qualifications, they must accept that the person who is currently working for £4 an hour will feel a bit of an idiot if he is working for exactly the same pay as the untrained person alongside him.

Mr. Pond: Will the hon. Gentleman give way?

Mr. Willetts: I am sorry; as the 10-minute rule is in operation, I should like to proceed with my speech.
If the person who is earning £4 an hour and has a qualification is to feel that obtaining that qualification was not a complete waste of time, he or she will expect some increase in pay to compensate.
We have all just received a letter from the Secretary of State for Education and Employment urging people to go to university and to college. What is the underlying message of that letter? It praises differentials; it argues that people should stay and obtain qualifications, because they will be able to increase their lifetime earnings. What we hear from the President of the Board of Trade and her team at the Department of Trade and Industry is completely inconsistent with the message that we receive from the ministerial team at the Department for Education and Employment. I sometimes wonder whether they communicate with each other.
We also hear a good deal from the Prime Minister and the Chancellor of the Exchequer about the importance of targeting. When they are put under pressure about their plans for cutting benefits, we are told that we must target the welfare state on people in poverty. I wonder whether the DTI team has any understanding of the concept of targeting. The one thing that we know about the minimum wage is that it is extremely ill targeted.
The Institute for Fiscal Studies says that the most affluent third of households will receive a higher income as a result of the minimum wage than the poorest third. We know that of the 10 per cent. of lowest earners


95 per cent. are not in the 10 per cent. of poorest households. We know—we are told often enough by the new Government—that there are a variety of ways of living: there are households in which some people may be on low incomes and others on higher incomes. My right hon. Friend the Member for Wokingham (Mr. Redwood) was quite right to say that family credit is very well targeted to deal with poverty wages. If wages cause a household to be in poverty, family credit will kick in.

Mr. Blizzard: Will the hon. Gentleman give way?

Mr. Willetts: I am afraid that I have only a few minutes left.
Family credit is aimed at dealing with poverty wages—wages that hold a whole family down in poverty. However, if someone is earning a low wage but is in a household with a high income, the minimum wage will be ill targeted and family credit unnecessary. The figures are dramatic. Let us say that, in a one-earner household with a young family, one person is in work and earning £3 an hour for a 40-hour week. That household will be entitled to another £55 a week in family credit. We do not expect people to keep a family on £3 an hour, and family credit deals with that.

Mr. Blizzard: Will the hon. Gentleman give way?

Mr. Willetts: I will, very briefly.

Mr. Blizzard: I thank the hon. Gentleman.
The hon. Gentleman's entire case has been based on the minimum-income family credit system. What does he think that system does for the self-respect and dignity of a man or woman who, after working hard for a week and doing everything that his or her employer wants, must go cap in hand to the state and ask for a handout?

Mr. Willetts: I will respect that intervention, on one condition. I hope that, when the Government introduce such a scheme for 18 to 24-year-olds as part of their welfare-to-work programme, the hon. Gentleman will intervene on his own Minister and make the same point.
What do we know about family credit, which is systematically rubbished by the Government? The Government say that people get stuck as a result of the payment of low wages by unscrupulous employers, but we know that only 12 per cent. of people receive family credit for more than a year. As my right hon. Friend the Member for Wokingham rightly explained, once someone is in work, even if it is low paid, he can then move on and up.
Another thing we hear about family credit is that somehow it is exploited by employers. We hear an ingenious argument in favour of the minimum wage—that it will save money, and will stop employers paying below-market rates and exploiting family credit. That has been researched. The completely independent Institute of Employment Studies carried out research into employers and family credit. I sometimes wonder whether Ministers are aware of that research, which concluded:
Employers did not have adequate knowledge of family credit or sufficient information about potential recruits to adopt such practices"—
that is, the practices that people are worried about. Nor, said the institute, did employers have the freedom to set wage levels. Only 9 per cent. of the employers

surveyed agreed that the availability of family credit affected the wages that they paid. The research concluded that family credit
has little impact on employers' employment practices in terms of their recruitment practices, the hours employees work, and their wage-setting strategies".
Family credit is simply not exploited by employers in the way that has been claimed.
If, however, we adopt the measures proposed by the Chancellor in his green Budget, employers will know all about the wages that their employees receive. The Chancellor proposes that, instead of family credit being delivered through the benefits system, a wage subsidy should be delivered in the form of a withdrawable tax allowance through the PAYE system. If the Chancellor introduces such a system, everything that the Government have been saying about family credit will apply in spades to that system.
At that point, employers will indeed have the crucial information. They will be doing the PAYE calculations; they will be working out exactly what an employee earns. I wonder whether members of the DTI team have discussed the Chancellor's idea with him. I wonder whether they have put to him all their rhetorical arguments against family credit—for which, as we know, there is no empirical support—given that those arguments apply to the very measure that their own Government recently announced as part of the Budget consultation.

Mr. Deputy Speaker: Order. Time is up.

Dr. Doug Naysmith: Thank you, Mr. Deputy Speaker, for allowing me to contribute to a debate on the national minimum wage. It is a subject of great importance to the country, and I am convinced that it will bring benefits to many of my constituents.
As this is my somewhat belated maiden speech, I shall begin by thanking the electors of Bristol, North-West for their patience, as well as for electing me on 1 May—not just as a Labour Member, but to represent the Co-operative party in the House. After a lifelong involvement as a Co-operator, I look forward to working with the other 24 Labour Co-op Members throughout this Parliament for co-operation in general, and for a Co-operatives Act in particular.
Bristol, North-West is a fascinating constituency. It is made up of six electoral wards in the city of Bristol and three electoral wards in the neighbouring unitary authority of South Gloucestershire. Although, as many hon. Members will be able to imagine, that dichotomy can on occasion cause tensions, the drive and energy in the constituency overall produce great benefits for the area.
Bristol is a wonderful city, and I have been amply rewarded for living and working there for the past 25 years. Its overall beauties and pleasures were well lauded on a previous occasion by my hon. Friend the Member for Bristol, West (Valerie Davey), but, for the record, in contrast with a description by my immediate predecessor in this place, I should like to say that Bristol, North-West contains numerous blades of grass. In fact, it has some fine open spaces and its share of historic buildings, such as Kings Weston house and Blaise Hamlet. Shirehampton, the part of the constituency where I live, was mentioned in the Domesday book.
It is also true that Bristol, North-West provides a large part of the economic engine that drives industry and commerce in the Greater Bristol area. We depend heavily on aerospace and defence industries and on related forms of manufacturing. Therefore, I look forward to the outcome of the current defence review, particularly what it says about defence diversification.
Bristol, North-West has a highly skilled work force, a tradition of invention and technical development and a variety of enterprises along Severnside, which have contributed greatly to Bristol's prosperity over the years. Also with its headquarters in Bristol, North-West is the Bristol Port Company, an enterprise with which I have had some involvement. It is highly successful and underpins much of the industry in the area. It still has the newest and largest lock in the United Kingdom, enabling it to take Cape-size ships. Although the lock is, "unfortunately", located in the constituency of the hon. Member for Woodspring (Dr. Fox), no one in Bristol ever forgets that it was built entirely by Bristol ratepayers without a penny of Government assistance.
Also to be found in Bristol, North-West is the university of the West of England, one of the finest of the new universities, and recognised for its teaching quality by independent assessors. It appears that that quality has been recognised by potential students, too—the number of applications is up this year compared with last, a somewhat unusual circumstance.
We also have Abbeywood, the Government's defence procurement headquarters and probably our largest employer, and Southmead, a large and distinguished district hospital with associated teaching status. It is well known for high standards of care and for innovation and research, and it was one of the first hospitals in the UK to pioneer work with neonates, which took place in the much loved, so-called SCBU, the special care baby unit, which is now known as the neonatal intensive care unit. We also have large Rolls-Royce and British Aerospace plants at Filton, just outside Bristol
As hon. Members will have realised, Bristol, North-West is a varied and exciting place, and an equally varied cast of characters has represented it at Westminster since 1945. The constituency has something of a reputation as a weather-vane seat—it is said that it changes in line with public opinion and generally votes for the party that forms the Government. It did that, although only just, in 1992, when, after many recounts, we lost by 45 votes for it to become the most marginal seat in England.
My immediate predecessor was Michael Stern and, although our relations were conducted in a civilised and polite manner, we disagreed, sometimes in public, quite a lot. Much of that was due to his tendency to blame all the ills of his constituents on Bristol city council, a body on which I was an active member, whereas I was much more inclined to blame the previous Government. Perhaps that is understandable. However, we agreed on some of the larger matters, including the battle against a commercial airport at Filton, a heavily populated area, and the improbability of a Severn barrage ever being built.
Michael Stern was very much a House of Commons man and is remembered for his skills in Committee. Although he did not reach great heights in government,

he did serve as a parliamentary private secretary to two Ministers and was a vice-chairman of the Conservative party. He was for some time, I am told, captain of the House of Commons chess team, and was in charge of the team that lost 13–3 to Westminster school. However, he fought hard for many of his constituents on an individual level and, since 1 May, I have come across many people who have told me of his tenacity in confronting various bureaucracies. He will be a hard act to follow. He has said that he does not intend to return to politics, and I wish him well in his future interests and activities.
Perhaps Ron Thomas, the hon. Member for Bristol, North-West from 1974 to 1979, will be an even harder act to follow for a Labour Member. Ron is a man of high principles, who is remembered here with respect. I am sure that the minimum wage cause is dear to his heart and something for which he would have fought hard.
I support the introduction of a national minimum wage because it is essential to create a "floor" to the labour market to tackle the exploitation of people with least bargaining power. The Trades Union Congress has produced figures that show that one in five employees earn less than £4 an hour, that nearly 1 million employees earn less than £2.50 an hour, that one in five of the population live in households with less than half the average income, that inequality in this country has grown faster over the past decade than in any other developed country, with the possible exception of New Zealand, and that since 1977 the number of people living well below average income has increased sevenfold.
Such figures should be unacceptable in a civilised, developed nation such as ours, and I fully support the Government's intention to begin to put things right. It is, however, essential to realise that the minimum wage is not just about justice—it also makes economic sense. We cannot compete on low cost alone. We must also compete on quality. Much evidence shows that low wages correlate with lack of training and failure to invest.
Despite the relative prosperity in some parts of my constituency—relative to previous times over the past 18 years and to other parts of the south-west—the national minimum wage is of direct application to many of my constituents in Bristol, North-West. There are estates where unemployment is unacceptably high. If welfare to work is to be successful, it is crucial that wages are high enough to attract people. Together with reform of the tax and benefit systems and our new deal, the national minimum wage should help the Government's strategy to promote work incentives and to provide people with the skills and opportunities to move into work.
The introduction of a national minimum wage provides an opportunity to reduce the unacceptable gap that remains between women's and men's pay. Far more women than men are low paid and that has many adverse affects for women and the economy. It makes it harder for women to be economically independent and to earn enough to escape from dependence on the social security system, and it reduces women's retirement incomes. For those reasons and because of the simple need to have equality between the sexes in the labour market, it is essential that the national minimum wage is calculated in relation to the distribution of male earnings, which can then be applied to female earnings.
I am glad, therefore, that the President of the Board of Trade has said that there will be a single rate, which will apply to all regions and sectors and all sizes of firms. When enacted, the Bill will have far-reaching effects, so I am both excited and pleased to be able to support it.

Mr. Alasdair Morgan: I congratulate the hon. Member for Bristol, North-West (Dr. Naysmith) on his maiden speech. It was thoughtful and well delivered. He described the qualities of his constituency to such an extent that I think we all understand why he is proud to represent it. He also paid humorous and generous tribute to his predecessors and I am sure that we will hear more of him; in fact, I cannot understand why we have not heard from him already.
The hon. Member supported the Bill's principle, which I also welcome. That principle was well established in this country for many years, until the previous Government decided to discontinue all the wages councils except the agricultural wages council. It is the principle that, in a civilised society, there is surely a minimum wage below which anyone who works for a living does not deserve to fall. I would go so far as to say that it encapsulates a moral imperative: people should be paid a wage that is capable of supporting them in their daily existence, after they have given their work to earn that wage.
In examining the background to the Bill, I looked at a document in the Library showing rates of pay by constituency. I was surprised to find a column for people who are paid less than £2.50 an hour. To that extent, it was an educational exercise. I was even more surprised to see how many people were in that column. It is a tragedy that in a society which is moving into the new millennium far too many people receive a wage that cannot support them or their families.
Obviously, costs are involved in the introduction of a minimum wage, but I suspect that no social advance was ever achieved in this country or anywhere else without cost. Perhaps it will be a cost to employers in this case. That was certainly the case with equal pay for women, and I suspect that Conservative Members' arguments against this Bill were used in the 19th century when Wilberforce and others tried to abolish slavery. The amounts being paid to some people are nothing short of slavery wages.
Many employers pay low wages because they know that the state will pick up the tab and will effectively pay to run their enterprises and subsidise their profits. Many arguments against the legislation fail because they look at only one side of the equation—the side that deals with the cost to employers. They do not consider the income that is generated by employees; the extra cash that will be put into the economy by people who benefit from a minimum wage.

Mr. Fallon: Will the hon. Gentleman be happy with a British rate or would he like the Scottish Assembly to have power to vary a rate with which he is unhappy?

Mr. Morgan: I am sure that an independent Scotland will be much more prosperous and will be able to afford a fairly high minimum wage. I look forward to that day.

Mr. Fallon: Will there be much difference?

Mr. Morgan: I am talking about an independent Scotland, which I am sure we shall see in the near future. I must press on.

Mr. Redwood: My hon. Friend asks an extremely good question. Does the Scottish National party think that the

Scottish Parliament will and should have the power to vary the rate? Would he wish to set a Scottish rate whatever is done in the United Kingdom?

Mr. Morgan: My answer was quite clear. I was talking about the possibility of a minimum wage in an independent Scotland because it is clear that it is only in an independent Scotland—and not under Labour's devolution proposals—that the Scottish Parliament will control the Scottish economy. If the right hon. Gentleman is asking whether I am in favour of the Scottish Parliament taking control of the Scottish economy and all that goes with it, the answer is a clear yes. Perhaps I can now return to my original point about the benefits to the economy of a minimum wage.
By definition, a minimum wage is paid to those who are on the lowest incomes, and those are the people who spend the largest percentage of their incomes buying necessities. That creates a demand for goods; people who complain about the cost of a minimum wage fail to realise that extra money will be put into the marketplace to buy goods.

Mr. Graham Brady: Will the hon. Gentleman give way?

Mr. Morgan: No. My time is limited.
That extra spending applies particularly to rural areas such as the one that I represent. There is simply not enough money circulating in the economy, and one of the knock-on effects of the Bill will be to increase that, especially in the rural economy. It is not just that people in rural areas have lower wages than people in other areas: they also have disproportionately higher living costs.
The hon. Member for Eastleigh (Mr. Chidgey) spoke about the high cost of living in urban areas and especially in London. He should buy a bag of groceries in London and then come to Stranraer to try to buy the same groceries at the London price. He will find that difficult. There is no future for the United Kingdom as a low-wage economy or one in which there is a large disparity between the lowest and the highest wage. Low-wage jobs are usually those that are most easily substituted by the introduction of new technology. Low wages do not engender industrial competitiveness. They may be a season ticket to long-term industrial decline and increased unemployment.
I am concerned about some details in the legislation. The first relates to the protection of employees and the enforcement of the minimum wage. We must ensure that the Bill's provisions are enforced and that the Government allocate sufficient resources to do that. One of the problems that we have inherited from the previous Government is that although there are regulations aplenty, there are not enough employees to enforce them. It would be a tragedy to pass legislation that gives so much hope to people and not put in place inspectors or mechanisms to enforce it.
Secondly, I am concerned about young people. If the level set for them is lower than the national minimum wage, so that there is a separate minimum wage for the young, older people in employment will be replaced by young people to whom employers can pay a lower rate. There should be a rate for the job, regardless of age. The needs of 20 to 26-year-olds are no different from the


needs of those who are over 26. I hope that the Government will not introduce a separate rate for those under 26.
I again welcome the Bill's principles. It is a step forward in introducing better financial conditions for many of our workers. Just as the 19th century factory Acts were a step forward in introducing better physical conditions for workers, the Bill is a step forward in introducing better financial conditions. It will be opposed by precisely the same sort of people who opposed the 19th century factory Acts, and for precisely the same reasons.

Mr. Chris Pond: I congratulate my right hon. Friend the Secretary of State on introducing the Bill. It is a long-overdue measure which will begin to bring to an end the poverty pay that has scarred the lives of so many. I pay tribute to the Minister of State, Department of Trade and Industry, my hon. Friend the Member for Makerfield (Mr. McCartney). As the House knows, he has been committed to getting the Bill before the House and making a minimum wage a reality.
As my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) kindly said, before I came to the House in May, I spent 17 years working for the Low Pay Unit, an organisation with which I am still proud to be associated. During that time, I saw the effects of the previous Government's policies at the sharp end. The number of those in poverty increased threefold during the Conservatives' term of office, and that led to low wages being the largest single cause of poverty. Britain has a larger proportion of its adult work force earning below the Council of Europe's decency threshold than any other European Union state. In my constituency, a third of the work force are in that category.
Each Christmas, the Low Pay Unit makes a "Scrooge of the Year" award. When I was at the unit, I was always a little anxious that the Conservative Government might take over the award. As my hon. Friends will understand, the unreformed Ebenezer Scrooge was to be pitied and reviled, but we were always fearful that the Conservative Government might decide to include him in the new year honours list for services to British industry in helping to turn Britain into the sweatshop of Europe. As we have heard, previous nominees for the award included the employer of a woman who worked in a residential nursing home. In a letter to her, that employer stated:
I would like you to work 5pm to 9am Monday to Sunday inclusive.
That is 112 hours of night work. The letter goes on:
Salary will be paid in arrears at a rate of £150 a week",
which is about £1.34 an hour.
Other nominees for the award included a clothing workshop in which staff are paid 59p an hour, and another in which staff are paid 1p for each petticoat and 5p for each dress sewn. Those rates were being paid not in the time of Dickens or in what we once called the third world

but in the early 1990s in the United Kingdom—which, until May, was Tory Britain. I have this year's nominations.

Mr. Redwood: Will the hon. Gentleman give way?

Mr. Pond: No, I have very little time. I apologise. I have this year's nominations, although I am sure that the right hon. Gentleman will have his own.
The nominations include a machinist earning 8p for each pair of trousers sewed; a worker in a residential care home earning £1.66 an hour; and a skilled needlewoman earning £1.25 a day for making puppets at home. As the House will appreciate, even this year, the judges are faced with a difficult decision. Such examples have convinced me of the Bill's importance and of the fact that, in this day and age, no one should be required to work for such pitiful pay and conditions.
Britain is the only country in the industrialised world without some form of legally enforceable pay protection. Since the previous Government abolished wages councils in 1993, no UK citizen, with the exception of those working in agriculture, has been entitled to any basic pay level. That is in contravention of the universal declaration of human rights, which states:
Everyone who works has the right to just and favourable remuneration ensuring … an existence worthy of human dignity".
Too many of our citizens are denied that basic human right and dignity. It is a matter of basic social justice.

Mr. Brady: Will the hon. Gentleman give way?

Mr. Pond: I am sorry, but I will not give way. Time is limited for all hon. Members, and especially for those on the Back Benches.
A minimum wage is an essential part of the Government's welfare to work strategy, which is designed to ensure that work pays. It is also a matter of equity. As my hon. Friend the Member for Bristol, North-West (Dr. Naysmith) said, a minimum wage will be of greatest importance to women. It is no coincidence that Britain is the only country without a minimum wage and the country in Europe with the widest pay gap between men and women. A minimum wage will do more to close that gap than equal pay legislation—important as that is—could ever achieve.
As we have also heard in the debate, in addition to justice and equity arguments, there is a sound economic and business case for a minimum wage. The Secretary of State reminded us of Churchill's words in establishing the minimum wage in 1909. He described the situation in which people earned less than a living wage as a "serious national evil". The previous Government and Conservative Members consider that not as an evil but as an instrument of economic strategy.
Many small firms—70 per cent. of them—are in favour of a national minimum wage precisely because of concerns such as those that Churchill expressed—that, without some form of minimum wage, good employers are undercut by the bad, and bad employers are undercut by the worst. Those firms believe that a national minimum wage will establish a fair playing field and ensure that cowboy employers are not able to undercut responsible firms in wages. A minimum wage will also ensure that responsible firms are able to invest in training and in


better production techniques that will help the United Kingdom to compete more effectively in the modern world.
We know also that a minimum wage will help to stimulate employment, economic growth and consumer confidence by increasing the spending power of several million of the poorest workers, allowing them to buy the goods and services that other people produce. Moreover, as several hon. Members have already asked, why should taxpayers be contributing between £3 billion and £4 billion annually to subsidise the low-wage and inefficient cowboy firms that are dragging down responsible employers? The net revenue effects of a minimum wage—in its benefits and tax implications, and even taking into account public sector cost—will certainly bring a smile to the face of my right hon. Friend the Chancellor of the Exchequer.
We have heard much from Conservative Members in the debate, and we will hear much more, about the supposed employment effects of a minimum wage. As the Secretary of State reminded the House, however, at each general election estimates of the impact of a minimum wage become ever more extravagant. The supposed employment effect was initially set at 60,000 lost jobs, but the number quickly rose to 600,000 under Norman Tebbit, who was then Secretary of State for Employment. The estimate then rose from 750,000 to 1 million and, before the 1992 general election, to 2 million. Immediately afterwards, it was revised downwards to 1 million.
Those estimates were based on assumptions that the Treasury has said were wholly arbitrary and without any empirical basis. All the evidence that we have available from this country, from the European Union and from the United States suggests that a minimum wage, if sensibly set, could enhance employment growth.
The cheap labour policies of the previous Government were justified on the basis that it was thought that the policies would create employment. The costs were very high, leaving us in a situation in which, last year, a South Korean manufacturer reported that he was paying two thirds as much to his staff employed in south Wales as he was to those doing the same job in South Korea. As we have also heard, the pay gap is wider now than it was in 1886, when figures were first collected. However, evidence on job creation in the years in which the previous Government's policies were pursued show that, proportionately, Germany created four times as many jobs as we did, Italy six times as many, and France twice as many.
What has happened since the 1992 general election, and the abolition of wages councils shortly afterwards? I am grateful to Professor Patrick Minford, former adviser to the Chancellor of the Exchequer in the previous Government, who said:
there has been no job creation, measured in extra hours worked, since 1992".
The Bill is a good Bill. It is comprehensive and, therefore, its enforcement is likely to be effective. I am grateful to the Secretary of State for dealing with concerns about clauses 3 and 4 and suggestions that they somehow mean that there will be an exemption or different treatment for those under 26. It is clear from her clarification that the Bill is an enabling measure to allow her to consider recommendations from the Low Pay Commission.

Mr. Philip Hammond: There is complete agreement among Conservative Members that achievement of a high-wage and high-productivity economy is a desirable objective. The way of achieving that objective is through labour market flexibility and sustainable economic growth. The Bill will deliver neither of those. It is an ill-conceived piece of legislation and a hangover from Labour's past. It is an IOU—

Mr. Desmond Turner: Will the hon. Gentleman give way?

Mr. Hammond: So soon!

Mr. Turner: If the hon. Gentleman thinks that the previous Government's proposals were such a wonderful way of promoting a high-wage and high-productivity economy, why did they not create one?

Mr. Hammond: We have prepared the ground—as economic growth continues—to generate just that: a high-wage and high-productivity economy.
The Bill is an IOU to the Government's paymasters in the trade unions—an IOU which, I suspect, many senior Ministers would love to tear up but dare not.
It is difficult to imagine a debate that will necessarily be as ill-informed as this one. It is ill-informed because we lack the vital piece of relevant information properly to debate the subject: the level of the proposed national minimum wage. Nothing could show us more clearly that the Government do not want to debate the issue properly than the fact that they are depriving us of that information.
Will it be a minimum wage with teeth—one that really bites? If so, the consequences could be significant, and the economic damage could be massive. Will it be a political gesture, and set at a level that will cover few workers and have few consequences for the economy? Will it be set at a level that is irrelevant in the south-east, or at a level that will cost thousands of job and hundreds of businesses in the north and in Wales?
I can see no reason why the Bill could not have been postponed until the Low Pay Commission had reported, so that we were able to debate the matter in a common sense manner, knowing the proposed initial level of the national minimum wage. Instead, we are forced to address ourselves to abstract theory.
The key to sustainable higher pay is increased productivity. That is the only way we can develop the high-wage, high-skill economy to which we all aspire. Workers who can upgrade their skills, and employers who can improve the productivity of their labour will survive the impact of the minimum wage. However, in the vast majority of cases, those employers and employees are already moving down that route as a result of the pressures of a tightening labour market in a growing economy.
Those who will be hurt by the national minimum wage include those who are unable to improve their productivity to cover the increased costs of their labour, employees who lack the ability or the inclination to reskill and employers who lack access to the necessary capital or technology.
The small business sector will be hit hardest. In many small businesses, the working proprietor already works very long hours for a low rate of return. The cost of a minimum wage will fall wholly on him. Increasing the effective hourly rate for his employees will, necessarily, reduce his own effective hourly rate. Very small businesses often do not have the ability to change the ratios of capital and labour within their business.
I predict that, at the margins, the result of minimum wage legislation, set at any effective level, will be to drive some small businesses into the black economy.

Mr. Huw Edwards: The hon. Gentleman may recall that many of these arguments were used against the Equal Pay Act 1970. Will he tell the House whether he now supports the repeal of that Act?

Mr. Hammond: Of course I do not support the repeal of that Act.
As I have said, I believe that the legislation may force some small businesses into the black economy—I am thinking of businesses with only one or two employees such as the examples given earlier—where employers and employees will conspire together to protect their jobs and their businesses.
Small businesses were promised proper representation on the Low Pay Commission, but that did not happen. Once again, we see the prospect of small businesses being the principal victims of the deliberations of so-called representative bodies, which primarily represent large business, organised labour and academic interests.
My hon. Friend the Member for Havant (Mr. Willetts) said that the evidence suggests that the minimum wage will have little impact on poverty. The households in the greatest poverty are generally without income from employment. The phenomenon of the working poor, while important, is a minor component of the overall poverty problem.
As the President of the Board of Trade indicated, the Government intend to make substantial savings from reductions in means-tested in-work benefits after the introduction of the minimum wage. That transfer of costs from the social security budget to employers represents yet another tax on business. One can argue the merits of the case, but the economic impact will be to impose yet another tax on business.
My right hon. Friend the Member for Wokingham (Mr. Redwood) drew attention to the impact on our public services, the enhancement of which has been set by the Government as one of their great priorities. How will a minimum wage help primary schools in my constituency to employ additional classroom assistants or special needs assistants? How will it help social services departments to provide better care for the elderly or the infirm? How will it help hospitals to shorten their waiting lists? Can the Government give us an assurance that, in every case, budgets will be increased to compensate for the impact of the minimum wage, not just for employees

paid at the minimum level but for the very many in the public sector who are paid just above any likely level of the minimum wage, as differentials are restored?

Mr. Woolas: Is the hon. Gentleman aware that in local government there is already a minimum rate of pay, which is set at about £4 an hour, and that those arguments have not applied there?

Mr. Hammond: The hon. Gentleman is speculating about what the minimum wage level will be. Perhaps he knows something that we do not. Perhaps the Minister would care to come to my constituency and explain to the dedicated mothers who work as classroom assistants in the primary schools—

Mr. Woolas: Will the hon. Gentleman give way?

Mr. Hammond: I will not give way.
Will the Minister explain to those mothers why their jobs should be put at risk? The legislation does not concede that there is a gradient between purely voluntary work and work motivated entirely by earning power. Many thousands of people in this country work for mixed motives, including many pensioners. They will no longer be able to take pin money jobs doing work they enjoy or which serves their communities. That shows me—if I needed to be shown—that the nanny state is alive and well under this Government.
This is an ill-conceived measure which will cause most damage to those it seeks to protect. It will cost the jobs of the most marginal employees and will destroy the most vulnerable businesses. If it is set at a level that bites, the minimum wage will push some employees into the black economy where they will not enjoy the benefit of a minimum wage and will lose the protection of much other employment legislation. It will damage the front-line capability of our public services. It would be better if it were not done, but the Labour party's debts to its paymasters have to be paid.
If the Government are determined to have the Bill, we must ensure, by debate and argument, that the minimum wage is set at a level where it applies only to those workers who are paid at a very low level. We must ensure that it is set by reference to total pay and not to some hourly rate of nominal pay, and we must ensure that those earnings are averaged over a period which reflects industry or employer custom and practice, and are not just imposed by the Government.
One of Britain's most striking successes of the past two decades has been the restoration of flexibility in its labour market. That achievement has insulated us from the worst experiences of our European neighbours over the past few years.

Mr. Roger Godsiff: I join many other hon. Members in congratulating the Minister of State, Department of Trade and Industry, my hon. Friend the Member for Makerfield (Mr. McCartney) on the production of the Bill. I wish to thank him for the enormous amount of work that he has put into it.
The Bill will be particularly welcome in my constituency. I should tell the hon. Member for Runnymede and Weybridge (Mr. Hammond) that this is


an IOU; it is an IOU to the people of this country, particularly low-paid workers, who have been desperate to see this legislation on the statute book. In three of the four wards in my constituency, there is an unemployment rate of well over 20 per cent. The majority of those who are employed work in the hotel, catering, retail and garment industries. Those are the very sectors of the economy in which low pay is concentrated. The excellent House of Commons Library document, which many hon. Members have, shows that 41 per cent. of those employed in the distribution, hotel or restaurant industries earn less than £4 an hour.
In my constituency—I am sure that the same is true in many others—the majority of those affected by low pay are part-time working women and young people. Perhaps unusually, in my constituency many of them come from the Asian community. In the sweatshops in my constituency, young Asian girls earn just over £1 an hour. If they are paid £1.50 an hour, that is considered to be a lot of money. That is at a time when the average gross wage in the United Kingdom is £8.75 an hour.
In many ways, it must be amazing to many hon. Members that we are even having this debate as we come to the end of this millennium and look forward to the next. Here we are debating decency in society and whether we should set a safety net below which people should not be allowed to fall.
Some of the comments that I have heard this evening from Opposition Members have been staggering. I did not know until now that the Tory party was officially in favour of subsidising poverty pay and I am grateful that that position has been made clear tonight. I thought that Conservative Members were more surreptitious about it, but tonight they have made it clear that that is their position.
I also found it interesting that a number of Opposition Members were proud of the fact that the wages councils were abolished. The right hon. Member for Wokingham (Mr. Redwood) crowed at their abolition and claimed that the abolition had created a great deal more employment. As has been said by other hon. Members, the one wages council that was not abolished was the Agricultural Wages Board. I should be interested to hear whether Opposition Members, most of whom since 1 May represent rural, rather than urban, constituencies—I say that with no disrespect—support the Agricultural Wages Board's minimum wage, which it has now laid down at £4.12 per week—[Laughter.] I mean an hour. I think that that Freudian slip makes my point. I should like to know whether Conservative Members support the board's decision of £4.12 an hour or whether they believe that the farm workers living in their constituencies are overpaid. I should be interested in their answers.
In the discussions on the subject that I have had with business—I was with the Confederation of British Industry in Birmingham only last week—it has expressed its concern, not at the Bill's principle, but at the level at which the minimum wage will be set. Of course, that level must take into account all the factors and it must be sensible and realistic. When I consider the chairmanship of the Low Pay Commission and the other members who have been appointed to it—they are knowledgeable and eminent—I have no doubt that all the factors will be taken into account. I am sure that the commission's

recommendation will be one with which industry can live comfortably. It will also be one which the low-paid people of this country will greatly welcome.

Mrs. Gorman: How will the hon. Gentleman make his views known to those people who he alleges are earning only £1.50 an hour if, as he hopes, the Government introduce a wage of £4.50 an hour and those people lose their jobs? How will that help those people to climb up the skills ladder that will enable them to earn better wages?

Mr. Godsiff: I hear what the hon. Lady says, but all I can tell her is that if I walked into some of those sweatshops and told the employees that they were to be paid £4.50 and hour, my majority would immediately go up from 19,000 to 29,000. I cannot answer the hon. Lady's question because we shall have to wait and see. I have heard the argument that if we set the minimum wage level too high we will produce a certain number of job losses and I have also heard the counter argument that if we set it at another level it will have no effect on job losses. I cannot give the hon. Lady the answer because I cannot look into a crystal ball, but I can look at the weekly pay packet of someone walking home with £70 or £80 to live on. I know that the hon. Lady would be mindful of the problems involved in trying to do that.
When the Low Pay Commission considers the subject, it must be very conscious of young people. It would be wrong to adopt the principle that people under the age of, for example, 25 should be treated differently from those over the age of 25 when they are doing exactly the same job. That principle cannot be right, but it can be right if the person is learning the job or is being trained. But once the other person has attained the skills and is doing the same job as the person standing next to him, it cannot be right, purely on the basis of age, to pay those two people different rates of pay. That would be a perverse sort of agism—agism turned upside down—and I hope that that will not happen.
I believe that the legislation will have a lasting, historical impact on the people and economy of this country. I believe that the legislation will be wholly to the good and that the millions of low-paid people of this country who looked to the Labour party to introduce such legislation will be pleased that the party has kept its promises and, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, paid its IOU.

Mr. David Maclean: The Bill shows the Government's arrogance, naivety and cack-handedness. It shows the Government's arrogance in setting up a Low Pay Commission and giving its members high salaries before having parliamentary approval to do so. I know that the new terracotta soldiers—

The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): May I correct the right hon. Gentleman: for the record, Low Pay Commission members are not being paid salaries. Unlike the previous Government, who had quangos full of Tory party members, the commission's members are prepared to work for nothing.

Mr. Maclean: I am delighted to hear that comment from the Minister of State, but the commission has been


set up without parliamentary approval and the taxpayer is incurring costs. Those hon. Members who have been here since before 1 May used to pay high regard to the precedent that a Government did not act until they had the statutory approval to do so. That is the first example of the Government's arrogance.
Another example of their arrogance is the fact that although the Bill is now before the House, we are not to be told about its guts. We are being asked to agree in principle a pig in a poke. The only people whom it will satisfy will be the Liberal Democrat Members, each of whom will be able to go home—they seem to have gone already—and tell his constituents that he voted for the principle, but not to worry as the rate that will be set will probably be perfect for the constituency. When, inevitably, the level turns out to be either too high or too low, the Liberal Democrats can blame the Government.

Mr. Brian Cotter: Perhaps we can be allowed to speak for ourselves on that subject and not have words put into our mouths.

Mr. Maclean: I shall remember not to bother to give way to the hon. Gentleman in future if that is the only sort of remark that he can make.
The Bill is one of the most important planks of the Government's legislation, but neither we nor the Labour Members have the slightest idea what the wage level will be. Will it be set at a very low level, as the President of the Board of Trade wants, or at a much higher level, as the Treasury wants or at a level that the Scottish Nationalists want? The one answer that I do want from the Minister of State tonight—if he would care to pay attention for a moment—is whether the Scottish Parliament, when it is set up, will be responsible for setting the minimum wage for Scotland or whether that responsibility will remain with the President of the Board of Trade. Will she be responsible for setting the minimum wage applied to the Scottish nation? We want a clear answer to that question. Either the power to set the minimum wage will remain with the President of the Board of Trade in England, and Scotland will fall into line with the United Kingdom national minimum wage, or the level will be set by the Scottish Parliament.

Mr. Ian McCartney: The national minimum wage is exactly that; it is a national minimum wage for all workers in Scotland, in Wales, in England and in Northern Ireland. There are no Tories left in Scotland who can argue the case for or against the national minimum wage.

Mr. Maclean: I am, however, Member of Parliament for a constituency on the Scottish border. That is why—

Mr. McCartney: Will the right hon. Gentleman give way?

Mr. Maclean: I will not give way again to the Minister.
It is important for my constituents to know whether we shall have a national minimum wage and whether a distortion will be caused by there being a different level in Scotland. I am relieved that the Scottish Parliament will not have the right to set a separate minimum wage which would be a great distortion in my constituency.
The Government are naive in another way. If they think that no distortions will be caused by a minimum wage, they clearly have no experience in the real industrial world. We have already heard that wages and living costs in different parts of the United Kingdom are fundamentally different. Our wages in Cumbria are, of course, lower than they are in the south-east, but so are our housing costs and our travel-to-work costs. Our schools and many other facilities are better and in the lake district, we have a better environment. We have all the competitive advantages.

Mr. Ian McCartney: Will the right hon. Gentleman give way?

Mr. Maclean: No; the Minister can make his own speech when he winds up the debate.

Mr. McCartney: Will the right hon. Gentleman give way, just once more?

Mr. Maclean: I will give way then.

Mr. McCartney: Will the right hon. Gentleman confirm that when he worked in industry, he worked for Securicor? Will he also confirm that Securicor is in favour of a national minimum wage and an agreement with the trade unions in its work force?

Mr. Maclean: The Minister seems to think that he makes an awfully telling point, but I fail to see it. Yes, I used to work for Securicor. If I did not like the wages it paid, I had the choice of working for someone else. I cannot see for the life of me what point the Minister is trying to make. I am fighting for my constituency and not for Securicor or any other employer. My constituency will be severely affected by a national minimum wage.
The national minimum wage will cause distortions which will harm labour in Cumbria, which already has the disadvantage of being one of the more remote parts of the United Kingdom. It will remove one of our most competitive advantages. Our cost of living is lower and, as I have told the House, many of our other costs are lower. Yes, our wages are lower. At the end of the day, however, the quality of living is every bit as good—

Mr. Desmond Turner: On a point of order, Mr. Deputy Speaker. The right hon. Gentleman should have said that his constituency is largely covered by the only minimum wage board, the Agricultural Wages Board.

Mr. Deputy Speaker: That is not a point of order for the Chair. It is clearly a matter for debate.

Mr. Maclean: The point made by the hon. Member for Brighton, Kemptown (Mr. Turner) is not a matter for the Chair. In addition, if that is the best point with which the Minister can prime his Back Benchers, he is even more feeble than I thought.

Miss Geraldine Smith: Will the right hon. Gentleman give way?

Mr. Maclean: No, I will not give way because I wish to conclude my remarks.
Many parts of the United Kingdom will be disadvantaged by the minimum wage, whatever it may be. There is no doubt that Cumbria's main competitive advantage will be removed. We shall be forced to pay proportionately higher hourly wages than other parts of the United Kingdom. That will remove our competitive advantage and that is why many of my constituents will suffer as a result of the Bill.
It is no good for the Government to pretend that everyone will be a winner and that there will be no losers. Once the Low Pay Commission reports, all the happy faces on the Labour Benches will suddenly change. Some Labour Members will be desperately unhappy that the wage is far lower than they expected, whereas others will be unhappy because it is higher than they expected and they will feel that their constituents will not get the protection they want.
The one thing that we can be certain about is that the House has been deprived of the opportunity to make a decision tonight on the real contents of the Bill. The House is giving the Government the power to impose a minimum wage when we do not have the faintest idea what that wage will be. That is treating the House with contempt and is typical of this Government's arrogance so far.

Ms Candy Atherton: I represent probably the lowest-paid constituency in the country. It would be fair to say that the people of Falmouth and Camborne are crying out for a national minimum wage. So important is the issue that I want to describe some of the problems that my constituents face.
At present, unemployment stands at 10 per cent. and is falling, but we are losing many of our traditional industries and replacing them with small companies which generally pay lower wages. Across Cornwall, our traditional industries are in decline. The problems of farming, fishing and mining are well known to the House.
The last tin mine in Cornwall—and, indeed, in Europe—is located in my constituency near Camborne. South Crofty provides employment for 200 to 300 people. Many development miners earn good wages and that is just one reason why we are fighting so hard to save the mine and the 900 jobs in the wider economy. Increasingly, our economy relies on tourism. Despite our best efforts, it is predominantly a seasonal industry and it is notorious for low pay. I will return to the implications of that later.
Against the background of a declining economy, the gross domestic product for Cornwall generally is 69 per cent. of the national average. As a county, we could qualify for objective 1 status in Europe and we are fighting for it. In Falmouth, Redruth, Penryn and Camborne, many thousands of my constituents are forced to rely on family credit to live. Survey after survey has found levels of poverty among the highest in the country. My constituency is designated a semi-urban area, yet it does not get urban relief and it does not qualify for rural assistance. We are caught not between a rock and a hard place, but between poverty and the sea.
Hon. Members might assume, given all those factors, that we enjoy lower prices, but that is far from the truth. Our water charges are among the highest in the country. Food costs are high, as our produce leaves the county for a song and is reimported at significantly higher rates.
Extraordinarily, we have some of the highest car ownership rates in the country. Public transport is scarce and, to get a job, people have to own a car. We are a pathfinder area for the new deal. The Employment Service correctly identified the fact that one of the biggest obstacles to the young people of Cornwall obtaining employment was the lack of transport. It is marvellous that a pool of mopeds is being bought to enable young people to get to jobs. People need transport to get to jobs. We are so reliant on the car that the county council has a real problem with second-hand car traders from Birmingham who bring down their wrecks which are then sold at inflated rates in the local economy.
In that context, cheap pay is a nightmare for my constituents. I will inform hon. Members of the levels we are talking about. The rate that sticks in my mind comes from a card I saw in the Penryn jobcentre. Among the advertisements for care workers at £2.20 an hour and kitchen porters at £2 an hour, one said:
Skilled car mechanic required for village garage. Must have own transport, 40 hours, weekends and nights. 1.80 an hour.
Just this Saturday, a man from Falmouth came to my surgery to ask for assistance. For a number of years, he and others have worked for a prestigious leading hotel in Falmouth, but they have been laid off; I understand that the management have brought in workers from France and Spain to work for £1 an hour.
The Government are absolutely right to bring in a national minimum wage. In my visits to companies throughout Cornwall, I have found that the companies that are doing well are the ones that pay their staff decent rates of pay, are investors in people and see training and quality as the key to the future. I am the daughter of a journalist and a hairdresser. My mother had three hairdressing salons, employing up to 30 staff. She was competitive—as I remember, a shampoo and set cost two and sixpence in old money—but she paid above wages council rates. She welcomed the wages council, as it stopped fly-by-night operators and prevented them from moving into her area and—no pun intended—undercutting her. That is as true today as it was when I was a child.
Hon. Members might think that, with the experience of low pay in my constituency, we have been overwhelmed by companies beating their way into the county; in fact, the opposite is true. We have low pay and high unemployment, and the larger employers are actually relocating up country, out of Cornwall, to higher wage areas. I do not want to hear Conservative Members' nonsense that low pay brings employment, because our experience is the opposite. The Bill is both morally and politically right. If my constituents are to be lifted out of poverty, the sooner it is in force, the better.

Mrs. Teresa Gorman: I am tempted to deal with one or two of the points raised by Labour Members that were rooted in cliches about unemployment, because such points sometimes go unanswered.
The subject of women's pay and the Equal Opportunities Commission was raised by the hon. Member for Oldham, East and Saddleworth (Mr. Woolas). The Equal Opportunities Commission has itself bewailed the fact that since equal pay was introduced and it began pursuing employers in courts over wages, the number of


women in high-skilled occupations—especially in the teaching and nursing professions, where women previously had niche employment opportunities—has been seriously undermined.

Mr. Woolas: indicated dissent.

Mrs. Gorman: I simply put that point to the hon. Gentleman, whether he approves or disapproves of it. The commission has said that equal pay has had an adverse effect on employment opportunities for women.
On the point that the hon. Gentleman made about his local council having a policy of paying £4.50 an hour, I can only say that, well, councils can pay that much. They are paying wages out of the public purse, so to speak—they draw the money that they use to pay people from rates and taxes and not from profitability in the marketplace. It is that profitability which drives up minimum wages, through competition for labour.

Miss Geraldine Smith: Will the hon. Lady give way?

Mrs. Gorman: No, the hon. Lady can have her own time a bit later.
The hon. Member for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) talked about women who were earning £1.50 an hour and how delighted he was that they were going to get £4 an hour and that he would be able to go down and tell them that that wonderful news was brought to them by the Labour party. According to that doctrine, the employer will have to find another £3 an hour for each person working in his factory—but the hon. Gentleman did not tell us where the employer was to get that money. The employer can get it only out of the profitability of his product.
What paying wages boils down to is the productivity of the individual person and that person's skills. Young people in my constituency aged 18 working as highly skilled bricklayers are not earning £1.50 an hour—they are taking home £800 or £900 a week. That may be the same rate or even a better one than older people receive, but it is dependent on their skills and productivity. That is the essence of the wages that employers can afford to pay.
I commented earlier on the composition of the Low Pay Commission. There are nine people on it, three of whom are academics who are on the state payroll and therefore not necessarily in need of supplementary income, as my right hon. Friend the Member for Penrith and The Border (Mr. Maclean) pointed out. Three others are trade union leaders—or senior executives—who are on the payroll of their unions, so the issue of whether or not they are being paid for sitting on the commission is not especially significant. Only three members of the commission represent some aspect of the employment world. One comes from the Confederation of British Industry, which represents large companies; one comes from the Scottish Grocers Federation, which is dominated by the large multiples; and the other comes from the Granada Group.
All those are large employers—not that they all pay high wages. Many employers in the security industry, which is dominated by large companies, pay relatively modest wages. The point is that if firms are in competition for business and they cannot pay more, the Bill will not

mean that their employees will go home with a larger pay packet; it means that they will go home with no pay packet at all.

Miss Geraldine Smith: Will the hon. Lady give way?

Mrs. Gorman: No, I have only 10 minutes and I am sure that the hon. Lady will make a marvellous contribution when she is called to speak.
I asked two business men in my constituency—real employers who provide real jobs—about the implications of the Bill. One of them is a respectable local builder who does lots of work for the local council, who has been a member of the council and who does splendid work. I asked him about wages in his industry, which is still controlled by the Construction Industry Training Board. I asked what would persuade him to pay higher wages and he told me that, to begin with, it was a matter of what the contractor would pay him. His contractors include the local council, which asks him to submit bids for jobs. He has to be competitive in the wages he can offer, because 90 per cent. of his outgoings are wages. To get work for his employees, he has to be competitive. It is not a question of whether he wants to be benevolent and double his employees' wages overnight—any employer would like to be able to do that—but in the real world employers have to compete for jobs.
That local builder tells me that the industry's training programmes have been largely destroyed by the trade unions, which insisted on apprenticeship schemes paying uneconomic rates to young people. He said that when they were facing deadlines his tradesmen were not going to slow down to train a young person when that young person was being paid almost as much as they were. It is not logical. In the building industry, hardly anybody—not even the big companies or local councils—take on trainees and apprentices because the market is competitive and the trade unions have set minimum rates.

Dr. Lynne Jones: Will the hon. Lady give way? Does she know the rates?

Mr. Deputy Speaker (Mr. Michael J. Martin): Order.

Mrs. Gorman: The trade unions have set minimum rates for young people.
The great majority of people on low wages are youngsters who are unskilled, women returning to the labour market with out-of-date skills, or people who are adding to a family budget. We keep hearing the cliché about all wages being a living wage or we talk about wages that support a family, but many people are bringing home a wage which contributes to a family budget and that bit of extra money means a lot to many families. The Labour party will not shed any tears if people cannot bring in that extra money, which means the difference between buying a pair of plimsolls for the children or getting them a prized pair of Reeboks, or taking the children to Disneyworld rather than to the local funfair. People go to work for all sorts of reasons, not just the wages—[Interruption.]

Mr. Deputy Speaker: Order. There is far too much noise in the Chamber. The hon. Lady is entitled to be heard.

Mrs. Gorman: Thank you for your support, Mr. Deputy Speaker.
Another group on modest wages are people with disabilities of various kinds, including intellectual disabilities, who cannot produce work at a rate or with the skills that will command high wages. It is quite right that the Government should step in to supplement their incomes. We should not throw the entire burden on the employer. The employer will simply say, "I cannot make enough money out of this person's labour to support the wages the Government are inflicting on us."
Several hon. Members, especially the hon. Member for Falmouth and Camborne (Ms Atherton), have mentioned the south-west. I have put it to the hon. Lady that the problem there also has to do with relatively low skills. As she says, it is an area which has traditionally relied on tourism, which accounts for many low-skilled jobs. There is no reason to denigrate those sorts of jobs. We are talking about highly competitive seasonal work.
The same applies to agriculture. It is no coincidence that the board presiding over agricultural wages oversees a low-paid industry. Almost without exception, the wages councils presided over industries with relatively low rates of pay; indeed, the rates set by the wages councils became not the minimum but the maximum for those industries. It was only when we abolished the wages councils for, say, the retail trade that wages in it started to rise. So the councils' effect was the opposite of that intended—

Several hon. Members: rose—

Mrs. Gorman: I will not give way, since the points I am making are all fascinating—

Mr. Deputy Speaker: Order.

Mr. Douglas Alexander: I am grateful for this opportunity to make my maiden speech in a debate on the national minimum wage, for it is a subject of the greatest importance to many of my constituents.
It is a convention of the House that a new Member should pay tribute to his predecessor. Even if there were no such convention, I would be determined to pay tribute to Gordon McMaster, the Member of Parliament for Paisley, South from 1990. I did not know Gordon well, although it is a matter of pride to me that on the day in 1990 when Margaret Thatcher resigned as Prime Minister I was campaigning for his election on the streets of Paisley. Christmas came early for the voters of Paisley that year, but it was to be another seven years before they had a Government who reflected their will and the will of the people of Scotland. During those years, Gordon came to be viewed throughout the constituency with real pride and affection for his concern and commitment to his constituents.
Like his father before him, Gordon was a gardener by trade. Before entering the House, he played a significant role in establishing a highly successful initiative, Growing Concern, which combined his love of gardening with providing opportunities for disabled people to learn about horticulture. When he entered the House, Gordon's long-standing commitment to disability issues was reflected in his parliamentary life. He served both as Front-Bench spokesman on disabled people's rights and as secretary to the all-party disablement group. He was a credit to his parents, Willy and Alison, to his constituency and to the House.
In his work in Parliament and the constituency, Gordon upheld the tradition of service of my first Member of Parliament, Norman Buchan—Gordon's predecessor. During my childhood, Norman was a frequent visitor to my home. His inspirational conversation and his commitment to socialism in part explain my presence in the House today.
My constituency, which both men represented in their day, is in the county of Renfrewshire. Having grown up and lived there for almost 20 years, I was especially honoured to be chosen by the Labour party to contest the seat and to be given so much support by so many.
The constituency that I have the privilege to represent is proud of its industrial heritage and the hard work of its people: the mills of Paisley, the carpet factory at Elderslie, the town of Johnstone, where the first machine tool foundry in the world was established. The people of my constituency embody many of the best qualities of the west of Scotland—a willingness to work hard, a sustaining sense of humour and an instinctive sense of community at all times.
I am proud of those traditions from the past, but I know that it is the future that matters. In this new economy, all that my constituents ask is to be given the chance to contribute their talents and skills to the work of the nation. Certainly, there are already successes. Paisley university faces the new century as a proud and ambitious institution. Renfrewshire continues its success in manufacturing; indeed, the county produces a third of all Scotland's manufactured exports. This is the pattern for the 21st century, when we shall have to produce the highest quality goods and services and sell them in an ever more competitive global market.
While traditional industries in the constituency have largely gone, many people in the work force are not equipped with the skills to contribute to, and benefit from, these new successes. To attempt to compete from a position of low skills and low wages offers not a route forward but a route back—back to unemployment, poverty and social division. I must report that more than 2,300 people in the constituency are officially unemployed, almost 600 of them under the age of 25. When they look for work at the local jobcentre, they see positions with hourly wages as low as £2.50 an hour for a cleaner, or £2.80 an hour for a kitchen assistant.
That is why the Bill matters urgently to the people of Paisley, South. For my constituents, it is a matter not of wanting a national minimum wage but of needing one. For 18 years, we had a Government who advanced the idea that the price of greater prosperity was greater inequality and who tried to frighten people out of their commitment to fairness. I am therefore impelled to speak my mind, not solely by anger but by a sense of urgency, to end injustice and to give opportunity to people who have had to wait too long for a Government who are on their side.
The new Government's proposals offer hope to the people of my constituency. Our victory on 1 May offers an historic opportunity to end the centuries old injustice of poverty pay. I was reminded of just how old the struggle to win decency in the workplace is when, on the night of my election, I entered Paisley town hall to await the result. As I entered the building, I passed the statue of Robert Tannahill, the weaver poet of Paisley. Almost two centuries ago, he was forced to leave the town


in search of a living wage. My constituents know all too well that the evil of poverty pay is still with us as we approach the 21st century.
When people look back at our time, let the national minimum wage be the monument by which they remember our commitment to dignity and decency in the workplace. The Government's Low Pay Commission will bring together businesses, large and small, with employees' representatives to settle the level of the minimum wage. There will, of course, be a debate about that level, but let there be decisiveness about the principle for the national minimum wage is not an exercise in compassion. It is an investment in our future. It forms an essential part of the Government's strategy to provide opportunity to work, to ensure that work pays, and to allow advancement through the acquisition of skills. It is a strategy based on the understanding that in the new global economy prosperity is not won at the price of social justice. I am reminded that many of the countries with higher per capita incomes have achieved their success on the foundation of a national minimum wage.
At the age of 15, I joined the Labour party in Renfrewshire because I believed in the values and ideals which had for generations taken members of my family into the Labour movement: a commitment to the belief that while we cherish our individuality we are part of a community with shared responsibilities and linked destinies, and the belief that wealth, power and opportunity should be in the hands of the many and not the few. The Bill advances those historic ideals in the modern economy, and that is why I and my constituents will support it.

Mr. Shaun Woodward: I congratulate the hon. Member for Paisley, South (Mr. Alexander) on his maiden speech. The House remembers his predecessor with considerable affection and his death with much sadness. Tonight, however, we heard a maiden speech that was made with a judicious balance between dignity, wisdom and generosity. I am sure that all hon. Members look forward to listening to the hon. Gentleman in the future.
This evening's subject has the capacity to excite high moral tones and to have all those in favour of the Bill reaching urgently for the pulpit. To some, it may seem like a debate about slavery all over again; one can ban slavery, but not poverty. The argument is about fair pay, but it should also be about whether pay can be realistic. Nobody is arguing that we should remove the importance of justice from employment. The question is what kind of justice the Bill will create. The President of the Board of Trade spoke of making work pay, but the danger of the Bill is that it will make the workers pay for it with their jobs.
My constituency will be badly affected by the measure. I cannot say how badly, because, like other hon. Members, I do not yet know at what level the minimum wage will be fixed. Some 11 per cent. of the work force in my constituency are engaged in tourism, and many people own small and medium-sized businesses such as newsagents. Hon. Members may have seen the survey recently published by the National Federation of Retail

Newsagents. The evidence was startling: it figured that a minimum wage fixed at £3 would mean that 22 per cent. of jobs in the newsagents business would be lost, and that a minimum wage fixed at £3.50 would mean that half the jobs would be lost.
I have listened to hon. Members this evening, particularly the hon. Member for Gravesham (Mr. Pond), whose work at the Low Pay Unit I respect and have followed over the years. We are all discussing poverty and, as the President of the Board of Trade said, the scandal of poverty. Nobody wants poverty in our society, but we must recognise that it is relative. There is a huge difference between poverty in the United Kingdom and poverty in India. It can be argued that we must improve the lot of everybody in our country, which is the duty of all Members of Parliament. Nobody disputes the fact that some people are badly off; the question is what we should do to make their lives better.
Would the Bill remove the "scandal of poverty", as it has been termed? I do not believe that it would, because many of the poorest households have no earners. How would the Bill help them? Low pay is concentrated among many married people and young adults, many of whom are part of households where the other partner earns a good living. The Bill would do little to help them, but the people who may need help and on whom our resources should be targeted would not be helped. How would the Bill help those caught in the poverty trap—those for whom benefits would be reduced if their earnings increase? My worry is that the Bill would transfer responsibility from the state to the employer. But who will look after people when they are laid off because of the minimum wage?
The devil in the Bill is in the detail. At best, the Bill is disingenuous; at worst, it is irresponsible. Members of Parliament will have to answer in the future for those whose hopes are dashed if the figure is fixed too low or for the lengthening dole queues if it is fixed too high. The hon. Member for Eastleigh (Mr. Chidgey) cited the importance of the United States, which is a comparison worth considering for a moment or two. The US minimum wage system is littered with exemptions. A few years ago, I had the good fortune to spend a year or so teaching at Harvard university, and experienced what life was like for Americans under the minimum wage system. It was not a panacea to cure all ills. The danger of the minimum wage in America is the way in which it has been continuously amended to create more exemptions.
As my hon. Friend the Member for Buckingham (Mr. Bercow) pointed out, firms in the US with a turnover of less than $500,000 a year are exempted. If one considers the level at which the minimum wage is fixed in the US—currently $5.15 or about £3.20—and compares average earnings in America with those in the United Kingdom, the level is fixed at the equivalent of about £2.70.
Has a minimum wage eliminated the scandal of poverty in the US? Hon. Members may be aware of a conference that took place yesterday in the United States—the conference of mayors. The report on the conference was startling. Hunger and homelessness, both symbols of poverty, are rising dramatically in the US; requests for food stamps and shelter rose by 16 per cent. this year, and 70 per cent. of cities reported turning away people who desperately needed help. That is a "scandal of poverty", and it is not a good model to follow.
Low pay may be relevant to explaining away those problems, but we must be clear about one thing: a national minimum wage will not eliminate poverty. What kind of justice will we have if there are no regional variations? It sounds right, but will it work in practice? Small businesses will find it hard—21 per cent. of businesses in the UK turn over less than £37,000 a year and in Wales the figure is £31,000, so Wales is being asked to bear a particular burden in the course of implementing the Bill.
The Government speak of "flexibility plus". They aim to achieve high and stable growth and employment, but the recently released James Capel study found that that if the minimum wage is fixed at £3.50 it will add 1.5 per cent.to the UK wage bill. It will also cost 250,000 jobs. I do not want to become involved in an auction about the number of jobs involved, but all the studies agree that if the level of the minimum wage is to be meaningful it will have an impact on employment. We would be foolish, however we vote tonight, to deny such an impact. There will also be an impact on interest rates and on the economy's growth.
This subject excites strong views. The Bill is well intentioned, but I believe that it is wrong. In the name of justice it will create injustice; in the name of making work pay it will make the workers pay with their jobs. In wanting to tackle the scandal of poverty, it will do little or nothing to clear up that scandal, except shift responsibility from the state to the employer. Having sent those employers bust in some cases, it will have created unemployment. The unemployed—the very people whom Labour Members want to be liberated from the state—will then come back and make their demands on the state.
The Government's language is high handed and moralising, but I fear that the Bill will do little to get people from welfare to work and much to get them out of work and on to welfare.

Judy Mallaber: In reply to the hon. Member for Witney (Mr. Woodward), may I say that of course the Bill is about poverty and justice, but it is a central plank of our economic policies. We cannot compete internationally on the basis of paying the lowest wages. We can never win that battle. Our future lies in developing a highly skilled productive work force competing on the basis of quality and innovation.
I have made those arguments over many years. I am very emotional about the debate because, I am proud to say, I was employed by the National Union of Public Employees when we were advancing the arguments for a minimum wage. I wrote many of the documents that made that case. We saw it as a moral argument about justice, but now we see it as an economic argument about a measure that will get the country on its feet again.
I shall give the example of an industry that is important in my area and is often regarded as one in which a minimum wage might lead to job losses—the textiles industry. Jobs have been lost in the textiles industry—because we cannot compete in the global race to the bottom with Morocco, Sri Lanka and the far east. The idea that we can do that is nonsense. We can never pay low enough wages to compete with those areas. That is not the way forward for the textiles industry.
In this country, there is a market for our local textiles. A company such as Marks and Spencer may take standard goods from overseas, but when it needs a new line or an

unusual product quickly, it needs speedy, flexible, quality producers based in UK plants. That is the basis on which we must compete.
There are already minimum earnings agreements in the industry that have permitted the reconsideration of payment structures, individual piecework and so on, which can militate against the flexibility, quality and efficiency that we need for our companies to compete and win orders. A minimum wage could provide payment structures that enable us to be more efficient and more competitive.
Two companies in my constituency, Courtaulds and Coats Viyella, already have national minimum earnings levels. Colin Dyer, the chief executive of Courtaulds, was recently quoted in The Guardian as saying that the company was preparing itself for the minimum wage by becoming more efficient.
Decent employers do not need to be undercut by cowboys and sweatshops seeking competitive advantage. We heard earlier the quotation from Winston Churchill about bad employers undercutting the good and the worst employers undercutting the bad. That is not a route we can afford to go down.
Tourism is another important industry in my constituency and it has been mentioned by several hon. Members. Is tourism advanced by a high staff turnover, which we have partly because of low wages? In our three-star hotels, there is a staff turnover of 33 per cent. How will those hotels attract visitors compared with France, with a turnover of 19 per cent., or Germany, which has a turnover of 16 per cent?
Low pay is connected with a low level of investment and training in the skills that we need. We must compete on the high ground of skills and productivity, so I welcome the Bill.
I have two practical suggestions. First, I hope that there will be common procedures to tie up implementation of the minimum wage legislation with equal pay legislation. This is the second stage of equal pay legislation; we must co-ordinate those measures. Secondly, we must consider procedures for the annual review and continuing monitoring of the minimum wage, preferably through the Low Pay Commission.
In reply to earlier comments, I find it extraordinary that Opposition Members consider us arrogant. We are trying not to be arrogant in the way the previous Government were; they introduced legislation drawn up without consultation or consideration and with no mechanisms for making it work properly. Our Low Pay Commission will do that and it will be a good and honourable way of ensuring that the Bill works well.
After arguing for such legislation for many years, it gives me enormous pleasure to support it tonight. It is a matter of morality, social justice and equality, and it is another plank in our modernisation of Britain and building an economy fit for the future. I shall be extremely proud to vote for the Bill.

Mr. David Prior: I begin by congratulating the hon. Members for Paisley, South (Mr. Alexander) and for Bristol, North-West (Dr. Naysmith) on their excellent maiden speeches. I was particularly struck by their references to the high levels of unemployment in their constituencies.
I, too, am aware of the great damage that long-term high unemployment does to individuals, society and family life. It is against a background of high unemployment that we consider the Bill.
In my constituency, I have many small firms engaged in the tourism and leisure industries. I have spoken to four or five companies over the past two weeks, all of whom cited cases of people who would not be working for them now if there was a national minimum wage. I think of a barman who was taken on on a casual basis. He worked almost for pocket money, but, because he was living at home with his parents, he could afford to do that. That casual barman is now the hotel manager.
I think of the thousands of casual and seasonal employees who work in the tourism industry—boys and girls doing holiday jobs, getting training and work experience; women who are topping up their husbands' income; pensioners who are doing extra work to top up their pensions. A variety of people are prepared, for all kinds of reasons, to work for relatively low wages.
I know of two people who work in a local care home. They work part time and receive a low wage, but they spend time talking to the residents of that care home, making coffee and doing jigsaw puzzles. Those sorts of jobs will not exist if there is a national minimum wage. There are many small firms in north Norfolk, and they will be hit hardest by a national minimum wage. It will apply not just to big firms in big towns but to small companies that operate in rural areas. I was struck by the plight of one constituent, who wrote:
We … have a requirement for some seasonal staff, and were the above level"—
that is, the minimum wage—
applied to them, I am sure that … the subsequent adjustment to all staff rates would be … injurious to the viability
of the business. Labour Members should not forget the impact that a national minimum wage will have on differentials. The Food and Drink Federation has said:
It should be clearly recognised, however, that the Potential Pressure for Maintenance of Differentials, and the Implications for Cost and Competitiveness, will be very considerable where the lowest rates of a grading structure have to be increased as a result of a national minimum wage.
All the evidence is that more Government intervention in the labour market, the social chapter and the national minimum wage will lead to higher levels of unemployment.

Mr. David Lepper: Thank you, Mr. Deputy Speaker, for calling me to speak in this debate. I also thank the hon. Member for North Norfolk (Mr. Prior) and my hon. Friend the Member for Amber Valley (Judy Mallaber) for their concise speeches, which have permitted me to participate.
We have heard much about the attitude of employers—particularly small businesses—to the minimum wage. I am glad to have this opportunity to remind my hon. Friend the Minister for Small Firms, Trade and Industry—who is on the Front Bench—of her visit to my constituency before the general election, during which

representatives of small businesses volunteered the view that no responsible employer would have any problem with a national minimum wage.
I can also tell my hon. Friend that several of my colleagues from Sussex constituencies, some Opposition Members and I met representatives of the Sussex branch of the Confederation of British Industry in Crawley just 10 days ago. They also told us that they envisage no problems with the national minimum wage policy. That is my experience of reactions to a national minimum wage, which is not based on reports from elsewhere.
I must draw attention to the situation in my constituency. I have said before that, although Brighton, Pavilion appears to be prosperous, it suffers from very real deprivation. Research conducted by the local council and the Low Pay Unit—I pay tribute to the work of my hon. Friend the Member for Gravesham (Mr. Pond) in this area—found that, in 1995, 43 per cent. of those in full-time work in East Sussex were living below the Council of Europe's decency threshold. It found also that 74 per cent. of those in part-time work were below that threshold. That is unacceptable.
The examples from the Brighton, Pavilion jobcentre that I shall now give are equally unacceptable. The jobs offered on a typical day included a chef, with three years' experience, working until 3 am for £3.25 an hour. That is the highest rate that I shall quote. A position for a qualified, full-time hair stylist was offered at £2.66 an hour. The position of care assistant, working 12 hours per night, was offered at £20 a night. The responsibilities of that care assistant are calculated to be worth £1.66 per hour. The Bill will do much to alleviate such degrading pay offers in my constituency. I congratulate my right hon. Friend the President of the Board of Trade on establishing the Low Pay Commission and introducing the Bill so quickly.
I remind the House that many people in my constituency work in the retail, hotel and catering trades and that nearly a quarter of employment in my constituency is provided by them. They are jobs that were once protected by the wages councils.
Many surveys have been mentioned; I shall refer to one more. A nationwide survey was undertaken by the low pay network in 1995. It revealed that 10 per cent. of the jobs in hotels and catering in 1995 paid less than in 1993 when the wages councils were abolished. Again in 1995, 20 per cent. of jobs in retail and hairdressing—major areas of employment in my constituency—were being paid at below the levels in 1993 when the wages councils were abolished.
I am sure that my constituents will welcome the Bill, as I do. It will have my whole-hearted support and the whole-hearted support of those hard-working people of the Pavilion constituency who far too often are paid far less than they deserve for the work they do.

Mr. Damian Green: Many of my right hon. and hon. Friends have made powerful economic cases against the Bill. Instead, I shall take a few minutes to make the moral case against it. Having listened to the debate, I am aware that Labour Members feel sincerely that they are on the moral side of the argument. They have had a few uncomfortable nights recently, with the more loyal or ambitious of them being dragged through the


Lobby supporting Government policies that they think are fundamentally immoral. That being so, they clearly feel good about themselves tonight. They feel that they are on the side of good. I want to puncture that illusion.
The Bill is actively immoral because its implementation will knowingly cause people to lose their jobs. It is—[Interruption.] I am glad that Labour Members find it amusing that people will lose their jobs; that is not the impression that they have tried to give to their constituents.
The Deputy Prime Minister has recognised, famously, that the minimum wage will cause some people to lose their jobs. Professor Bain has said that he would be surprised if there were not some job losses. The question is whether these jobs—

Miss Geraldine Smith: Will the hon. Gentleman give way?

Mr. Green: No. I am sorry. At this stage of the debate I cannot give way to the hon. Lady.
The professor's question is whether the jobs that would be lost would be better lost anyway. I observe in passing that those who take that view are seldom referring to their own jobs. Which people will lose their jobs? We know the answer precisely: the young and the unskilled will bear the principal brunt of these job losses. I do not find it moral that the Government are introducing a policy that will specifically make it more difficult for young people and the unskilled to find jobs.
A continuing debate is centred on exemptions. For example, should there be exemptions for trainees, for under-26-year-olds and perhaps for under-21-year-olds? What is so great about a policy that means that a policy that means that the Government are trying to find exemptions for the most vulnerable groups in society? It is clear that the level at which the national minimum wage will be set will be vital.
Broadly speaking, in other European countries where there is a minimum wage, the higher the percentage of the average wage at which the minimum wage is set, the higher is the level of youth unemployment. Many Labour Members have mentioned with pride the sectors that will be affected by the Bill if it is enacted, such as textiles, tourism and hotels. All of these—

Miss Smith: Will the hon. Gentleman give way?

Mr. Green: I shall not give way to the hon. Lady because we are approaching the replies from the Front Benches.

Miss Smith: rose—

Mr. Green: No. I am under pressure of time and unable to give way to the hon. Lady.
The Bill is immoral because it will affect certain sectors that are staffed by some of the most dedicated people in society. I have been approached in my constituency by teachers and administrators in nursery schools who say that they employ people on very low wages precisely because those people know that jobs are not available at a higher level and because they feel a vocation for such

work and are quite prepared to do it on low wages. If the minimum wage is introduced, those jobs will simply disappear and some nursery schools will close.
Another reason—it has not yet been mentioned—why the Bill is immoral is the fact that there will be so much detail at the margin, which will go some way to re-create the culture of fiddling at the edges that incomes policies introduced in the 1960s and 1970s. The Secretary of State mentioned the problems with bonus payments, benefits in kind and deductions from earnings. With all those bits and pieces around—

Mr. Alasdair Morgan: Will the hon. Gentleman give way?

Mr. Green: I am not giving way. I am sorry, but time is limited.
All those areas brought incomes policies into disrepute and led to novel forms of payment. All that will be reintroduced in certain sectors of the economy if the minimum wage is introduced. That will make this country a less moral place as well.
The Bill is immoral because Parliament is being invited to take this decision blind. It is absurd to debate the Bill's Second Reading when we do not have its central feature—the minimum wage itself. It is bad that Parliament is asked to discuss the Bill at this stage. We should discuss it after the Low Pay Commission has reported. The Government's attitude is rather like the famous company involved in the south sea bubble that invited people to invest in it and said that they would be informed in due course of the purpose of their investment. That is effectively what the Government are asking the House to do this evening.
The Bill is immoral because it deludes people into thinking that it is an attack on poverty. It will not reduce poverty. Many of my hon. Friends produced figures that show that the people who will be affected by the minimum wage are the groups in society who are most affected by poverty.
The Bill will increase unemployment, especially for the young and unskilled. It will discourage workers from taking low-paid, socially useful work. It will re-create the culture of rule bending that surrounded incomes policies in the 1960s and 1970s. Parliament is being asked to take a decision when it has not been given the central piece of information that it requires to take that decision. The Bill also fails to address the problem of poverty.
This is not a morally uplifting Bill; it is a half-baked measure. It is a bad Bill and it deserves to be voted down.

Mr. Russell Brown: I realise that we are on a very tight schedule. I shall make one or two extremely important points.
Opposition Members have commented on the arrogance of the Government in setting up a Low Pay Commission before we have even debated the Bill. It is only common sense that we set up the Low Pay Commission which, despite the arguments of Opposition Members, is very representative.
The Conservatives say that what we are doing is nothing more than asking businesses to pay a wage that in turn will save the payment of benefits. I hope that


Opposition Members do not think that there is anything to be gained by, or that people take any pride in, claiming benefits. It is degrading. People do not want to claim benefits. The argument is not simply about a decent living wage, but about people exploiting the system. The argument that businesses will have to shed jobs and that they will go to the wall is nonsense. The Bill plugs a loophole whereby people have exploited the system for many years.
I am not sure whether the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan), who represents my neighbouring constituency, mentioned that we both come from an area which, if it is not the lowest paid, is the second lowest paid in Scotland. The argument about having a minimum wage that is not national and about there being different rates in different areas just does not hold water. I take great exception to the fact that, in some of its documentation, our local enterprise company in Dumfries and Galloway boasts that it can encourage inward investment because the area has competitive rates of pay—in other words, we pay scandalously low wages. I can tell some horror stories about that.
The cornerstone of the family is broken down when parents try to hold down two or, in many cases, three jobs to make ends meet. People have to work 50, 60 or 70 hours a week, and their children never see them. They rush backwards and forwards in and out of the house trying to hold down jobs to make ends meet to avoid joining the benefit system, which Conservative Members think is the right way to act.
Thank you, Mr. Deputy Speaker, for the couple of minutes that I have had to make my points this evening. I hope that hon. Members will feel that it is appropriate to support the Bill.

Mr. Michael Fallon: It is a duty and a pleasure to congratulate the hon. Members for Bristol, North-West (Dr. Naysmith) and for Paisley, South (Mr. Alexander) on two of the most eloquent maiden speeches that I can remember. Both paid due tribute to their predecessors. We echo their tributes, and we look forward to hearing from both of them again.
It has been a singular feature of the debate that while Labour Members have welcomed the Bill in principle, not one was prepared to argue for the exemption or lower rate for younger people that the Government themselves have invited the Low Pay Commission to recommend.
The Opposition oppose the Bill. We believe that it is damaging for jobs and for the economy and that it will not help the lowest-paid in our society, points eloquently made by my hon. Friends the Members for Havant (Mr. Willetts), for Runnymede and Weybridge (Mr. Hammond), for Billericay (Mrs. Gorman), for Witney (Mr. Woodward) and for Ashford (Mr. Green).
The story of the minimum wage is typical of the Government's first seven months. We have seen U-turns, inconsistency, deception, ministerial rows and even, as I shall come to later, the threat of a ministerial resignation. Above all, we have seen deep unease throughout the Government about the effects of the minimum wage in practice.
The Government cannot even decide what the minimum wage is all about. The Minister of State tells us that it is about ending poverty pay. The President of the Board of Trade, launching the Bill, said that it was economically sensible. The Chancellor of the Exchequer, in his pre-Budget statement, said that it could have adverse effects on employment or inflation. I invite the Minister to tell us which of those aims is the Government's aim tonight.

Miss Geraldine Smith: Will the hon. Gentleman give way?

Mr. Fallon: I shall give way later.
The Government cannot even make up their mind about the status of the Low Pay Commission. First, they set it up, then they rig its membership. It does not contain a single person who has run a small business in this country. Representing small business men is a single trade association worthy from Scotland who represents but 500 members.
Having boasted of setting up the commission within 90 days of taking office, 60 days later, the Government change its terms of reference. The Chancellor instructs the President of the Board of Trade to write to the commission inviting it to consider exemptions for young people and those in training.
We see exactly the same inconsistency when it comes to the level of the minimum wage.

Miss Smith: I find it ironic that for 18 years I watched the Conservative party, which was supposed to roll back the nanny state, foster unemployment in Britain, causing millions of people to live in poverty through benefit dependency. During those 18 years, we had the poll tax, North sea oil revenues were squandered, and old-age pensions were eroded. Some people still live on welfare in poverty and misery. [Interruption.] We are trying to do something about that. We want to get people back into employment through our welfare-to-work programme. [Interruption.] Conservative Members may heckle: they do not like it.

Mr. Deputy Speaker: Order. I think that the hon. Lady has made her point.

Mr. Fallon: I hope so, because she had long enough.
We see the same inconsistency from the Government on the level of the minimum wage. At the election, Labour's employment spokesman, now our Prime Minister, said that it should be half male median earnings, which is currently £4.61. We learn from The Sunday Telegraph that the President of the Board of Trade and her Minister of State favour a rate of £4 an hour. We read that the Chancellor and his senior advisers are opposed to a minimum wage much above £3.50 an hour. Perhaps the Minister of State could assist us when he winds up the debate in the style of the pocket Cicero, to which we have become accustomed, by telling us exactly what level he favours for the minimum wage. In its evidence, the Confederation of British Industry told us that the range should be between £3 and £3.20 an hour. Does the Minister agree with that?
When it comes to the coverage of the minimum wage, we find the same indecision. At the Amsterdam summit, the Prime Minister endorsed the presidency's conclusion


that wage agreements across Europe should take more account of differences in qualifications and between regions to facilitate job creation. The Minister of State told us on 20 November that there should be no regional, no sectoral and no company derogations. Exactly one week later, the Bill exempts share fishermen, makes special arrangements for agricultural workers, and excludes every 16 to 25-year-old.
Clause 39 makes special provision for some of the lower-paid in, I assume, Jersey or Guernsey. The clause is entitled,
Power to apply Act to offshore employment.
The Government are showing touching concern for the lower-paid bankers, lawyers and trustees who reside on the islands of Jersey and Guernsey.
More seriously, the Minister of State, who said that there would be no exemptions, has clearly forgotten that, in a written answer on 28 July, he guaranteed that the Bill would
not penalise occupational training activity, including … training as child-carers as part of the Government's welfare-to-work scheme."—[Official Report, 28 July 1997; Vol. 299, c. 64.]
We shall deal with that issue in Committee.
The President of Board of Trade was careful to invite the commission to consider a wider definition of an hourly rate. She took the trouble to mention precisely what the CBI has called for, which is that the rate should include consideration of benefits in kind, such as board and lodging, meals, tips and pension contributions. I wonder whether she agrees with the CBI, which wants all new employees to be exempted from the minimum wage for the first six months of their employment. Does she agree with the Engineering Employers Federation, which wants all modern apprenticeships and all training to be exempted?

Mrs. Beckett: I think that the hon. Gentleman has been misinformed. That is not what the CBI said. If the hon. Gentleman looks at the full text of what Mr. Turner said, he will see that Mr. Turner was talking about training. I am not criticising the hon. Gentleman, because that is how what was said was reported in the press, but I understand that it is not what Mr. Turner said or what he meant to convey. He was talking about people in training.

Mr. Fallon: The President of the Board of Trade is a busy lady, but may I invite her to read the CBI's full evidence to the Low Pay Commission? I think that it puts the matter beyond all doubt.
There is one Minister who, for all his many faults and other characteristics, sees the dangers of an inflexible national rate, and the unemployment that may well result. Throughout the autumn, he argued for the power in the Bill to vary the rate according to region, according to sector and according to size of business. When his advice to the President of the Board of Trade was leaked to The Guardian, he hastily wrote to that newspaper to explain why such a power was needed. He wrote:
The point I raised in correspondence … was a practical one, as to whether the draft Bill as worded allowed Ministers sufficient flexibility to refine policy in the light of experience of the actual functioning of the national minimum wage.
He knows perfectly well that hundreds of thousands of jobs could be lost if an inflexible rate was insisted on, but that was not the view that was finally taken. We now

learn of a furious dispute between the Minister without Portfolio and the Minister of State, Department of Trade and Industry.

Mr. Denis MacShane: Will the hon. Gentleman give way?

Mr. Fallon: Let me finish. I quote from The Independent on Sunday, which carried the headline:
Labour covers up minister's revolt … McCartney tried to resign".
I have to give the House some rather sad news. The Prime Minister, we understand,
would happily have accepted Mr. McCartney's resignation".
That was "suggested at Westminster", not by Conservative Members. We look forward to the Minister's continuing to fight his battles.

Mr. MacShane: I am glad that the hon. Gentleman has given way at this point, when he was talking about resignation. Surely he could have mentioned at the beginning of his speech that, according to the Register of Members' Interests, he is a director of a nursery school organisation. He has remunerated employment as an adviser to nursing homes, which are among the worst employers in terms of low pay. If it comes to resignation, the hon. Gentleman has no right to stand at the Dispatch Box tonight.

Mr. Fallon: Interventions such as that are not worthy of comment.
I now come to the biggest deception visited on the debate by the Government. They have claimed, month after month, that business organisations are in favour of the Bill. Those who look at the evidence supplied to the Low Pay Commission—and we have looked at it—will see that not a single business organisation supports the principle of a statutory minimum wage. Indeed, most business organisations see it as entirely the wrong way in which to tackle poverty.

Mr. Allan Rogers: On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Rotherham (Mr. MacShane) raised a point earlier, and I now wonder whether it would not have been appropriate for the Opposition spokesman to declare his interest at the beginning of his speech. As we know, nursing homes pay very low wages. I suggest that the hon. Member for Sevenoaks (Mr. Fallon) has a direct vested interest in the debate, and that he should have declared it.

Mr. Deputy Speaker: The hon. Member for Sevenoaks (Mr. Fallon) has acted entirely properly. This is not a matter for the Chair.

Mr. Fallon: I am sorry that Labour Members are not prepared to address the argument.
The Engineering Employers Federation says that it does not support the introduction of a national minimum wage because of its effect on differentials and the increased cost of subcontracted services.

Several hon. Members: rose—

Mr. Fallon: I have given way generously.
The CBI says:
Business opposes a national minimum wage, which would undermine flexibility and is a poor way to tackle poverty.
Indeed, the CBI makes it clear that a minimum wage could result in
rising prices, business closures and unemployment.

Mr. MacShane: It is a disgrace.

Mr. Deputy Speaker: Order. The hon. Member for Rotherham (Mr. MacShane) cannot behave in that manner. He must give the hon. Member for Sevenoaks a hearing.

Mr. Sheerman: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I have ruled on the previous point of order, so I hope that it is not on the same matter.

Mr. Sheerman: On a separate, but related matter, those of us who have been in the House for some time always understood that, before one made a speech, one declared one's interest, if there was a specific interest. Have the rules changed, so that Opposition Front-Bench spokesmen do not have to declare any interest?

Mr. Deputy Speaker: The declaration of interest rule is clear. That is what the Register of Members' Interests is for, and hon. Members know their responsibilities. I am saying that that is not a matter for the occupant of the Chair and that the speech of the hon. Member for Sevenoaks is perfectly in order.

Mr. Fallon: The CBI has made it clear that
Even a modest minimum, set around the £3 mark, could lead to job losses unless wage differentials are squeezed.
I pointed out to the President of the Board of Trade that the Federation of Small Businesses, too, is opposed to a statutory minimum wage in principle. It is no use the Minister for Small Firms, Trade and Industry—who is covering up the fact that she has failed to exempt small firms from the legislation—saying that she once attended a conference at which the federation said that it would like a sensibly negotiated minimum wage. It may have supported a sensibly negotiated minimum wage. The point is that it wanted to negotiate it and, in its manifesto, it remains opposed to a statutory minimum wage.

The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche): Will the hon. Gentleman give way?

Mr. Fallon: No. I have given way generously. I am taking up the time of the Minister of State.
Business is clear that jobs will be lost. The CBI is clear that even if—

Mrs. Roche: rose—

Mr. Fallon: I give way.

Mrs. Roche: I was privileged to speak at the annual meeting of the Federation of Small Businesses. It had a

debate on the issue and, by a resounding majority, it passed a resolution in favour of a sensibly negotiated minimum wage. Why cannot the hon. Gentleman accept the democratic position? Why cannot he accept that fact, even if he does not like it?

Mr. Fallon: The hon. Lady has walked straight into the trap. Immediately after that vote by the federation, Mr. Bill Knox, chairman of its employment affairs committee, reminded delegates that the federation opposed the imposition of a statutory minimum wage, but advised that the motion as it stood was not a proposal for such. That deals with that point.
Business is clear that jobs will be lost. The CBI is clear that jobs will be lost. The North-East chamber of commerce says that 50 per cent. of employers will cut their work force, that 61 per cent. of employers believe that higher-paid employees will seek to maintain differentials and that 63 per cent. of employers want different rates by region.
In the KPMG study that it commissioned, the British Hospitality Association, which represents the important hotel and tourism industry, says that at a rate of £3.50 an hour, 32,000 jobs will be destroyed in the industry. The Department of Trade and Industry's report, which the President of the Board of Trade was rather coy about, and which was prepared by Mr. Paul Lanser, an official in her Department—

Mr. Rogers: On a point of order, Mr. Deputy Speaker. As you know, it is not for me to argue with the occupant of the Chair or to dispute your ruling in any way, but, as I understand it, an advocacy rule was passed in a resolution of the House on 6 November 1995. It extended an earlier resolution prohibiting hon. Members from engaging in advocacy on behalf of outside bodies or persons from whom they receive payment. The hon. Member for Sevenoaks (Mr. Fallon) is a director and heavily involved in the nursery

Mr. Deputy Speaker: Order. There is a Parliamentary Commissioner for Standards, and the House has decided that any complaint of the nature that the hon. Gentleman raises should be referred to him. I refer the hon. Gentleman to the Commissioner.

Mr. Fallon: A Department of Trade and Industry study, which was prepared by Mr. Paul Lanser, an official in that Department, estimates the employment losses from a minimum wage set at various rates. At a rate of £3.50, assuming a half restoration of differentials, the job loss was 974,000. There is no point in Ministers saying that that was before the election, because we are living now with their proposals, and that estimate is as valid now as it was then. If the Minister does not think that 1 million jobs are at risk, perhaps she could give us the latest estimate that has been provided for her.

Mr. Peter Bradley: Will the hon. Gentleman give way?

Mr. Fallon: No. I am already eating into the Minister's time.
My right hon. Friend the Member for Wokingham (Mr. Redwood) has already said how the Deputy Prime Minister admitted that there would be some shake-out. He said:
any silly fool knew that".
Those words remain true.

Several hon. Members: rose—

Mr. Fallon: I am not giving way again.
The Prime Minister has commented on the potential job losses from the minimum wage. He wrapped it up in rather weasel language. I think that when he wrote to The Independent, he was courting the left. He stated:
I have not accepted that the minimum wage will cost jobs … I have accepted that econometric models indicate a potential jobs impact".
That is exactly the point.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. The House must come to order. The hon. Gentleman does not intend to give way.

Mr. Fallon: It is no comfort to those who will be thrown out of work by the Bill to be told that an econometric model has been measuring the potential impact on their jobs. It is no comfort to those whose low-skilled jobs will disappear, and such jobs are often the first to start up the ladder. Through the Bill, the Government are kicking that ladder away for those who are least able to compete—the unskilled, the young, the elderly, the most vulnerable in our society. The Bill will be deeply damaging.
The Chancellor accepts that the Bill will increase inflation; add to public spending; hit school and hospital budgets; damage competitiveness; hammer small businesses, which are exempted in other countries from the minimum wage; and discourage people from adding to their training and seeking higher qualifications. Above all, it will cost jobs. That is why we oppose it. Even if business had negotiated the amount of the minimum wage and if there were some flexibility for small businesses, which there is not, and regional variations, which there are not, we would still oppose this attack on jobs.
We warn the Government that if unemployment rises—and we think that it will as a direct consequence of the Bill—they will bear the responsibility for pricing the most vulnerable people in our society out of jobs and destroying their lifeline to a better future. That is why we oppose the Bill.

The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): The hon. Member for Sevenoaks (Mr. Fallon) has eaten considerably into the time available for my speech. Consequently, I intend to put the Government's case forcefully without interventions from him or from other Opposition Members.
However, the hon. Gentleman paid a very eloquent tribute to the maiden speech of my hon. Friend the Member for Bristol, North-West (Dr. Naysmith), for which I thank him. My hon. Friend not only made a

very thoughtful speech but paid tribute to his predecessor, whom I knew and occasionally disagreed with. I welcome that tribute. I am also absolutely sure that my hon. Friend will be a significant player in the House on behalf of his constituents and on behalf of business in Bristol, North-West.
My hon. Friend the Member for Paisley, South (Mr. Alexander) showed his mettle in a very difficult by-election. He paid tribute to his predecessor who was lost in tragic circumstances. I am absolutely sure that my hon. Friend will make his mark in this place and will prove himself one of the best representatives that Scotland has ever sent to the House.
My hon. Friend the Member for Amber Valley (Judy Mallaber) was, as usual, eloquent and knowledgeable on minimum wage issues. She shared her original views on the issue and told the House how she has contributed over the past few years to the minimum wage debate. I look forward to working with her during the Bill's passage.
My hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry), as usual, made an eloquent and well-argued case. He explained why employer after employer in the British hospitality industry supports the principle of a minimum wage.
My hon. Friend the Member for Burnley (Mr. Pike) clearly explained how vulnerable workers were damaged when the previous Tory Government withdrew basic rights to minimum wages by abolishing wages councils.
My hon. Friend the Member for Gravesham (Mr. Pond) has for more than two decades been one of those who have kept the flag flying on behalf of tens of thousands of low-paid workers in Britain. I look forward to the announcement of the Scrooge of the Year.
My hon. Friend the Member for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) explained again just what happens in an inner-city constituency after 18 years of Tory Government hammering away at low-paid workers, isolating them, and refusing both to accept the necessity of minimum wages and to do something about poverty pay.
My hon. Friend the Member for Falmouth and Camborne (Ms Atherton) spoke eloquently about problems of poverty in Britain's lowest paid constituency. I look forward to working with her in the campaign.
My hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) spoke of business's support for the minimum wage in his constituency.
I shall now deal with the speech of the hon. Member for Sevenoaks and his remarks about me. May I point out that the only hon. Member I know of who quit politics because he could not reach agreement with his leader is the former Secretary of State for Wales? He is the quitter, not me. He is also the loser. He fought for the leadership of his party, and he lost. He fought to become Leader of the Opposition and lost. He is the loser, not me. As for visiting the Prime Minister at No. 10 Downing street, he always left his Prime Minister without agreement. When I leave my Prime Minister, I always have an agreement.

Mr. Redwood: I am grateful, Mr. Deputy Speaker.

Mr. McCartney: I am not giving way. The right hon. Gentleman will have plenty of time to speak in January, if he wants to join us in the Bill's Committee stage.
This has been one of the happiest days of my life—[Interruption.] Hon. Members may laugh, but for almost three decades—

Mr. James Gray: On a point of order, Mr. Deputy Speaker. Is it in order for the Minister at the Dispatch Box to give way one moment to an Opposition Front Bencher and then—the next moment, under instructions from the Secretary of State—to turn round and say, "No, I don't give way after all"?

Mr. Deputy Speaker: That is a matter for the hon. Gentleman who has the Floor, not for the Chair.

Mr. McCartney: Perhaps I can help the hon. Gentleman, who is a new Member. When one is only 5 ft tall, it is difficult for people to know whether you are standing or sitting. For the record, I am standing.
I want to place on the record my thanks to those who worked with me in opposition in formulating this policy, campaigning in the country and managing the fat-cat campaign, which is probably one of the most successful campaigns in British political history. There was a mammoth consultation with business—more than 200 individual meetings and discussions—in advance of our publishing proposals for the Low Pay Commission and the national minimum wage. That culminated in a Labour victory on 1 May.
Today's debate has been characterised, as usual, by the Tory suspects in the low-pay brigade. They are smug, self-centred and complacent in the extreme. I want to talk about the real-life issues of low pay. Nearly 1 million of our fellow citizens earn less than £2.50 an hour, and 750,000 families receive in-work benefits such as family credit. They have a full-time job all week and still cannot afford to live. Eighteen years of Tory rule has left the gap between the poor and rich at its largest since the 1880s.
I shall return to the plight of low-paid workers and their families in a moment, but I want to allow myself a little cheer. As a former low-paid worker, I never dreamt that I would ever be a Member of Parliament, let alone a Minister standing at this Dispatch Box replying to an historic debate that would lead to Britain's first truly national minimum wage. Many low-paid workers in Britain are unsung heroes every day of the week. They seek to gain justice.
I know what happens. I lost count of the number of jobs I lost or from which I was sacked. I used to be known as DCM McCartney—don't come back on Monday. Only last week, I was at a seminar on the national minimum wage and there was an employer in the audience who had sacked me. He was there to support the introduction of a minimum wage. That is real progress. That is new Labour and a new minimum wage.
Low-paid workers never have a voice; they are powerless and isolated. Throughout this debate, there has not been a clear understanding of what it means to be low paid. Some people work from home and have caring responsibilities, but are exploited for having those responsibilities. The low paid are fearful of speaking out and fear being given the sack. They are frightened of not being able to pay their own way or provide for their children—they come first and the parents go without.
We do not have to tell low-paid workers about low pay because they live it seven days a week, 365 days a year, year in, year out.
Opposition Members never acknowledge that some low-paid workers have more than one job in a day. Some women work early morning, afternoon and evening because they earn only £1 an hour. To help their family out of poverty, they work hour after hour in undignified circumstances. With a national minimum wage, the Labour Government are coming to the rescue of those women.
The low paid are excluded from the mainstream. They cannot afford school trips for their kids, family outings or days out and sometimes cannot afford a present for their children on their birthday. That is the reality—that is what it is about. This is about feeling valued and having personal dignity when an employer is treating you no better than a dog. We want to introduce respect and fairness. [Interruption.]

Mr. Deputy Speaker: Order. We cannot have prolonged conversations in the House while someone is addressing hon. Members. The House must come to order.

Mr. McCartney: I do not expect to receive respect from Opposition Members, but I expect them to respect the low paid.
The minimum wage is vital to ending the scandal of poverty pay; it is not only social justice, but it makes good economic sense. My right hon. Friend the President of the Board of Trade set out eloquently the economic case for the introduction of a national minimum wage.
It has been said that setting up the Low Pay Commission without consultation was arrogant. The policy was in our manifesto and was overwhelmingly endorsed by the British people. The commission's members were selected by the Nolan public appointments procedure; advertisements were placed in the national press. They have been appointed for their knowledge, skills, business backgrounds and understanding of labour market activity. I strongly object to Opposition Members impugning the character of many of those people who have given their time to the Low Pay Commission for the public good, at the expense of their own time and companies to ensure the successful launch of a national minimum wage.
The commission is an independent organisation which will report on the initial rate for the minimum wage; it will consider exemptions for young people who are in training, the methods of calculation, the economic circumstances at the time and the impact on small and medium-sized businesses.
We have been consulting nationwide and have received more than 500 responses, which are overwhelmingly in favour of the principle of a national minimum wage. When the commission has concluded its report, we shall report back to the House, which will debate the regulations. This Government are happy not only to consult, but to carry out their election promises at the earliest opportunity.

Mr. Redwood: Will the hon. Gentleman give way?

Mr. McCartney: No, I shall not give way.
After 18 years of Tory control in this country, low pay is everywhere—in rural areas, in urban areas, in the north, south, east and west. That is the Tories' legacy. In London, 87,000 people earn less than £2.50 an hour. In the south-west, 87,000 people earn less than £2.50 an hour. In London, 55,000 families require in-work benefits at the end of the week. The figure is the same for the south-west. It is not regional rates that we need, but the quick introduction of a national minimum wage to help end poverty in the workplace.
The hon. Member for Sevenoaks said that there was no support among business for the minimum wagep—[Interruption.]

Mr. Deputy Speaker: Order.

Mr. McCartney: It is okay—I am standing.
The hon. Member for Sevenoaks kept trying to say that the Federation of Small Businesses did not vote in support of the minimum wage, but I am pleased to give him the result of the ballot. There were 23,757 in favour of the motion; there were 18,473 against—a majority of 57 per cent. over 43 per cent. The problem is that Opposition Members are not good at democracy and cannot accept the decision.
Yesterday, I received a letter from the head of Bass, which stated:
Bass supports the principle of a minimum wage".
It is interesting to note why it says that. It has admitted that in certain parts of its business it has a staff turnover of 100 per cent. a year. That means that 50,000 people a year leave the company's employment. The purpose of the national minimum wage is to ensure quality investment in training and education and the ability for people to earn a good wage so that they can remain in employment.
The Rank organisation wrote to me yesterday and said:
Rank are responsible employers and, in principle, are not opposed to a national minimum wage".
Tesco wrote to me this morning and said:
Tesco has stated for several years that it does not see any problems with a National Minimum Wage.
As an example of good employment, employers and trade unions can work together in a modern, progressive and evolving way to further the interests of staff and shareholders.
There is one company that has not written: Asda, the company of the hon. Member for Tunbridge Wells (Mr. Norman). It is no wonder, as he is the man who says that the minimum wage will cost 350,000 jobs. As chairman of Asda, last year he received £2.2 million, made up of a £551,000 salary, plus performance-related bonuses. The Asda group's pre-tax profit was just over £400 million. There is hypocrisy and double standards. Business survey after business survey supports the minimum wage.
The right hon. Member for Wokingham is isolated. Few businesses support him; they have all deserted the Tories. Businesses want to get on and succeed, and to produce quality goods and services. They are sick and tired of being undercut by the cowboys. I ask my hon. Friends to go into the Lobby tonight on behalf on low-paid workers and to make sure that the Tories do not get away for even another hour with the concept that employers should pay people £1 an hour. My hon. Friends should support the Bill.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 387, Noes 145.

Division No. 120]
[10 pm


AYES


Abbott, Ms Diane
Clwyd, Ann


Adams, Mrs Irene (Paisley N)
Coaker, Vernon


Ainger, Nick
Coffey, Ms Ann


Ainsworth, Robert (Cov'try NE)
Cohen, Harry


Alexander, Douglas
Coleman, Iain


Allan, Richard
Colman, Tony


Anderson, Donald (Swansea E)
Connarty, Michael


Anderson, Janet (Rossendale)
Cook, Frank (Stockton N)


Armstrong, Ms Hilary
Cooper, Yvette


Ashdown, Rt Hon Paddy
Corbett, Robin


Ashton, Joe
Corbyn, Jeremy


Atherton, Ms Candy
Corston, Ms Jean


Atkins, Charlotte
Cotter, Brian


Austin, John
Cousins, Jim


Banks, Tony
Cranston, Ross


Barnes, Harry
Crausby, David


Battle, John
Cryer, John (Hornchurch)


Bayley, Hugh
Cummings, John


Beard, Nigel
Cunliffe, Lawrence


Beckett, Rt Hon Mrs Margaret
Cunningham, Rt Hon Dr John


Begg, Miss Anne
(Copeland)


Benn, Rt Hon Tony
Cunningham, Jim (Cov'try S)


Bennett, Andrew F
Cunningham, Ms Roseanna


Benton, Joe
(Perth)


Bermingham, Gerald
Dalyell, Tam


Best, Harold
Darling, Rt Hon Alistair


Betts, Clive
Darvill, Keith


Blears, Ms Hazel
Davey, Edward (Kingston)


Blizzard, Bob
Davey, Valerie (Bristol W)


Blunkett, Rt Hon David
Davidson, Ian


Boateng, Paul
Davies, Rt Hon Denzil (Llanelli)


Borrow, David
Davies, Geraint (Croydon C)


Bradley, Peter (The Wrekin)
Davies, Rt Hon Ron (Caerphilly)


Bradshaw, Ben
Davis, Terry (B'ham Hodge H)


Brake, Tom
Dean, Mrs Janet


Brown, Rt Hon Gordon
Dewar, Rt Hon Donald


(Dunfermline E)
Dismore, Andrew


Brown, Rt Hon Nick (Newcastle E)
Dobbin, Jim


Brown, Russell (Dumfries)
Donohoe, Brian H


Browne, Desmond
Doran, Frank


Buck, Ms Karen
Dowd, Jim


Burgon, Colin
Drew, David


Byers, Stephen
Drown, Ms Julia


Caborn, Richard
Dunwoody, Mrs Gwyneth


Campbell, Alan (Tynemouth)
Edwards, Huw


Campbell, Mrs Anne (C'bridge)
Efford, Clive


Campbell, Menzies (NE Fife)
Ellman, Mrs Louise


Campbell, Ronnie (Blyth V)
Ennis, Jeff


Campbell-Savours, Dale
Etherington, Bill


Canavan, Dennis
Ewing, Mrs Margaret


Cann, Jamie
Fearn, Ronnie


Caplin, Ivor
Field, Rt Hon Frank


Casale, Roger
Fisher, Mark


Caton, Martin
Fitzpatrick, Jim


Cawsey, Ian
Fitzsimons, Lorna


Chapman, Ben (Wirral S)
Follett, Barbara


Chaytor, David
Foster, Rt Hon Derek


Chidgey, David
Foster, Michael Jabez (Hastings)


Chisholm, Malcolm
Foster, Michael J (Worcester)


Clapham, Michael
Foulkes, George


Clark, Rt Hon Dr David (S Shields)
Fyfe, Maria


Clark, Dr Lynda
Galbraith, Sam


(Edinburgh Pentlands)
Galloway, George


Clark, Paul (Gillingham)
Gapes, Mike


Clarke, Charles (Norwich S)
Gardiner, Barry


Clarke, Eric (Midlothian)
George, Andrew (St Ives)


Clarke, Rt Hon Tom (Coatbridge)
George, Bruce (Walsall S)


Clelland, David
Gerrard, Neil






Gibson, Dr Ian
Lawrence, Ms Jackie


Godman, Norman A
Laxton, Bob


Godsiff, Roger
Lepper, David


Goggins, Paul
Leslie, Christopher


Golding, Mrs Llin
Lewis, Ivan (Bury S)


Gordon, Mrs Eileen
Lewis, Terry (Worsley)


Gorrie, Donald
Liddell, Mrs Helen


Graham, Thomas
Linton, Martin


Grant, Bernie
Livingstone, Ken


Griffiths, Jane (Reading E)
Livsey, Richard


Griffiths, Nigel (Edinburgh S)
Lloyd, Tony (Manchester C)


Griffiths, Win (Bridgend)
Llwyd, Elfyn


Grocott, Bruce
Lock, David


Grogan, John
Love, Andrew


Gunnell, John
McAllion, John


Hain, Peter
McAvoy, Thomas


Hall, Mike (Weaver Vale)
McCabe, Steve


Hall, Patrick (Bedford)
McCafferty, Ms Chris


Hamilton, Fabian (Leeds NE)
McCartney, Ian (Makerfield)


Hanson, David
McCartney, Robert (N Down)


Harman, Rt Hon Ms Harriet
McDonagh, Siobhain


Harris, Dr Evan
Macdonald, Calum


Heal, Mrs Sylvia
McDonnell, John


Healey, John
McFall, John


Heath, David (Somerton & Frome)
McGuire, Mrs Anne


Henderson, Doug (Newcastle N)
McIsaac, Shona


Hepburn, Stephen
McKenna, Mrs Rosemary


Heppell, John
Mackinlay, Andrew


Hesford, Stephen
McNulty, Tony


Hewitt, Ms Patricia
MacShane, Denis


Hill, Keith
Mactaggart, Fiona


Hinchliffe, David
McWalter, Tony


Hodge, Ms Margaret
McWilliam, John


Hoey, Kate
Mahon, Mrs Alice


Home Robertson, John
Mallaber, Judy


Hoon, Geoffrey
Mandelson, Peter


Hope, Phil
Marek, Dr John


Howarth, Alan (Newport E)
Marsden, Gordon (Blackpool S)


Howarth, George (Knowsley N)
Marshall, David (Shettleston)


Howells, Dr Kim
Marshall, Jim (Leicester S)


Hoyle, Lindsay
Marshall-Andrews, Robert


Hughes, Ms Beverley (Stretford)
Martlew, Eric


Hughes, Kevin (Doncaster N)
Maxton, John


Humble, Mrs Joan
Meale, Alan


Hurst, Alan
Merron, Gillian


Hutton, John
Michie, Bill (Shef'ld Heeley)


Iddon, Dr Brian
Michie, Mrs Ray (Argyll & Bute)


Illsley, Eric
Milburn, Alan


Jackson, Ms Glenda (Hampstead)
Miller, Andrew


Jackson, Helen (Hillsborough)
Mitchell, Austin


Jenkins, Brian
Moffatt, Laura


Johnson, Alan (Hull W & Hessle)
Moran, Ms Margaret


Johnson, Miss Melanie
Morgan, Alasdair (Galloway)


(Welwyn Hatfield)
Morgan, Ms Julie (Cardiff N)


Jones, Barry (Alyn & Deeside)
Morgan, Rhodri (Cardiff W)


Jones, Mrs Fiona (Newark)
Morley, Elliot


Jones, Helen (Warrington N)
Morris, Ms Estelle (B'ham Yardley)


Jones, Ms Jenny
Morris, Rt Hon John (Aberavon)


(Wolverh'ton SW)
Mountford, Kali


Jones, Jon Owen (Cardiff C)
Mudie, George


Jones, Dr Lynne (Selly Oak)
Mullin, Chris


Jones, Martyn (Clwyd S)
Murphy, Denis (Wansbeck)


Jowell, Ms Tessa
Naysmfth, Dr Doug


Keen, Alan (Feltham & Heston)
Norris, Dan


Keen, Ann (Brentford & Isleworth)
Oaten, Mark


Kelly, Ms Ruth
O'Brien, Bill (Normanton)


Kemp, Fraser
O'Hara, Eddie


Kennedy, Jane (Wavertree)
Olner, Bill


Khabra, Piara S
O'Neill, Martin


Kidney, David
Öpik, Lembit


Kilfoyle, Peter
Osborne, Ms Sandra


King, Andy (Rugby & Kenilworth)
Palmer, Dr Nick


Kingham, Ms Tess
Pearson, Ian


Kirkwood, Archy
Pendry, Tom


Kumar, Dr Ashok
Perham, Ms Linda


Ladyman, Dr Stephen
Pickthall, Colin





Pike, Peter L
Steinberg, Gerry


Plaskitt, James
Stevenson, George


Pond, Chris
Stewart, David (Inverness E)


Pope, Greg
Stewart, Ian (Eccles)


Pound, Stephen
Stoate, Dr Howard


Powell, Sir Raymond
Stringer, Graham


Prentice, Ms Bridget (Lewisham E)
Stuart, Ms Gisela


Prentice, Gordon (Pendle)
Stunell, Andrew


Prescott, Rt Hon John
Sutcliffe, Gerry


Primarolo, Dawn
Swinney, John


Prosser, Gwyn
Taylor, Rt Hon Mrs Ann


Purchase, Ken
(Dewsbury)


Quin, Ms Joyce
Taylor, Ms Dari (Stockton S)


Quinn, Lawrie
Taylor, David (NW Leics)


Radice, Giles
Thomas, Gareth (Clwyd W)


Rammell, Bill
Thomas, Gareth R (Harrow W)


Rapson, Syd
Tipping, Paddy


Raynsford, Nick
Todd, Mark


Reid, Dr John (Hamilton N)
Tonge, Dr Jenny


Rendel, David
Touhig, Don


Robertson, Rt Hon George
Trickett, Jon


(Hamilton S)
Turner, Dennis (Wolverh'ton SE)


Roche, Mrs Barbara
Turner, Desmond (Kemptown)


Rogers, Allan
Turner, Dr George (NW Norfolk)


Rooker, Jeff
Twigg, Derek (Halton)


Rooney, Terry
Twigg, Stephen (Enfield)


Ross, Ernie (Dundee W)
Tyler, Paul


Rowlands, Ted
Vaz, Keith


Roy, Frank
Wallace, James



Walley, Ms Joan


Ruane, Chris
Ward, Ms Claire


Ruddock, Ms Joan
Wareing, Robert N


Russell, Bob (Colchester)
Watts, David


Russell, Ms Christine (Chester)
 Webb, Steve 


Savidge, Malcolm
Welsh, Andrew


Sawford, Phil
White, Brian


Sedgemore, Brian
Wicks, Malcolm


Shaw, Jonathan
Wigley, Rt Hon Dafydd


Sheerman, Barry
Williams, Rt Hon Alan


Sheldon, Rt Hon Robert
(Swansea W)


Shipley, Ms Debra
Williams, Alan W (E Carmarthen)


Simpson, Alan (Nottingham S)
Williams, Mrs Betty (Conwy)


Skinner, Dennis
Willis, Phil


Smith, Angela (Basildon)
Wilson, Brian


Smith, Rt Hon Chris (Islington S)
Winnick, David


Smith, Miss Geraldine
Winterton, Ms Rosie (Doncaster C)


(Morecambe & Lunesdale)
Wise, Audrey


Smith, Jacqui (Redditch)
Wood, Mike


Smith, John (Glamorgan)
Woolas, Phil


Smith, Llew (Blaenau Gwent)
Worthington, Tony


Smith, Sir Robert (W Ab'd'ns)
Wray, James


Smyth, Rev Martin (Belfast S)
Wright, Anthony D (Gt Yarmouth)


Snape, Peter
Wright, Dr Tony (Cannock)


Soley, Clive



Spellar, John
Tellers for the Ayes:


Squire, Ms Rachel
Mr. David Jamieson and


Starkey, Dr Phyllis
Mr. Graham Allen.




NOES


Ainsworth, Peter (E Surrey)
Bruce, Ian (S Dorset)


Amess, David
Burns, Simon


Ancram, Rt Hon Michael
Butterfill, John


Arbuthnot, James
Cash, William


Atkinson, David (Bour'mth E)
Chapman, Sir Sydney


Atkinson, Peter (Hexham)
(Chipping Barnet)


Baldry, Tony
Chope, Christopher


Bercow, John
Clappison, James


Beresford, Sir Paul
Clark, Rt Hon Alan (Kensington)


Blunt, Crispin
Clarke, Rt Hon Kenneth


Body, Sir Richard
(Rushcliffe)


Boswell, Tim
Clifton-Brown, Geoffrey


Bottomley, Peter (Worthing W)
Collins, Tim


Brady, Graham
Colvin, Michael


Brazier, Julian
Curry, Rt Hon David


Brooke, Rt Hon Peter
Davies, Quentin (Grantham)


Browning, Mrs Angela
Davis, Rt Hon David (Haltemprice)






Day, Stephen
Malins, Humfrey


Dorrell, Rt Hon Stephen
Maples, John


Duncan, Alan
Mates, Michael


Duncan Smith, Iain
Maude, Rt Hon Francis


Emery, Rt Hon Sir Peter
Mawhinney, Rt Hon Sir Brian


Evans, Nigel
May, Mrs Theresa


Fabricant, Michael
Moss, Malcolm


Fallon, Michael
Nicholls, Patrick


Flight, Howard
Norman, Archie


Forth, Rt Hon Eric
Ottaway, Richard


Fowler, Rt Hon Sir Norman
Page, Richard


Fox, Dr Liam
Paice, James


Fraser, Christopher
Paterson, Owen


Gale, Roger
Prior, David


Gamier, Edward
Randall, John


Gibb, Nick
Redwood, Rt Hon John


Gill, Christopher
Robathan, Andrew


Gillan, Mrs Cheryl
Robertson, Laurence (Tewk'b'ry)


Goodlad, Rt Hon Sir Alastair
Roe, Mrs Marion (Broxbourne)


Gorman, Mrs Teresa
Rowe, Andrew (Faversham)


Gray, James
Ruffley, David


Green, Damian
St Aubyn, Nick


Greenway, John
Sayeed, Jonathan


Grieve, Dominic
Shephard, Rt Hon Mrs Gillian


Hague, Rt Hon William
Shepherd, Richard


Hamilton, Rt Hon Sir Archie
Simpson, Keith (Mid-Norfolk)


Hammond, Philip
Soames, Nicholas


Hawkins, Nick
Spelman, Mrs Caroline


Hayes, John
Spicer, Sir Michael


Heald, Oliver
Spring, Richard


Heathcoat-Amory, Rt Hon David
Stanley, Rt Hon Sir John


Hogg, Rt Hon Douglas
Steen, Anthony


Horam, John
Streeter, Gary


Howarth, Gerald (Aldershot)
Swayne, Desmond


Jack, Rt Hon Michael
Taylor, Ian (Esher & Walton)


Jackson, Robert (Wantage)
Taylor, Sir Teddy


Jenkin, Bernard
Townend, John


Johnson Smith,
Tredinnick, David


Rt Hon Sir Geoffrey
Trend, Michael


Key, Robert
Tyrie, Andrew


King, Rt Hon Tom (Bridgwater)
Walter, Robert


Kirkbride, Miss Julie
Wardle, Charles


Laing, Mrs Eleanor
Waterson, Nigel


Lait, Mrs Jacqui
Wells, Bowen


Lansley, Andrew
Whitney, Sir Raymond


Leigh, Edward
Whittingdale, John


Letwin, Oliver
Widdecombe, Rt Hon Miss Ann


Lewis, Dr Julian (New Forest E)
Wilkinson, John


Lidington, David
Willetts, David


Lilley, Rt Hon Peter
Wilshire, David


Lloyd, Rt Hon Sir Peter (Fareham)
Winterton, Mrs Ann (Congleton)


Loughton, Tim
Winterton, Nicholas (Macclesfield)


Luff, Peter
Woodward, Shaun


Lyell, Rt Hon Sir Nicholas
Yeo, Tim


MacGregor, Rt Hon John
Young, Rt Hon Sir George


MacKay, Andrew



Maclean, Rt Hon David
Tellers for the Noes:


McLoughlin, Patrick
Mr. John M. Taylor and Mr. James Cran.


Madel, Sir David

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

Orders of the Day — NATIONAL MINIMUM WAGE BILL [MONEY]

Queen's recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a),
That for the purposes of any Act resulting from the National Minimum Wage Bill it is expedient to authorize—
(1) the payment out of money provided by Parliament of—

(a) any expenditure incurred under the Act by a Minister of the Crown or government department or by a body performing functions on behalf of the Crown; and
(b) any increase attributable to the provisions of the Act in the sums payable out of such money under any other Act; and
(2) the making of payments into the Consolidated Fund.—[Janet Anderson.]

Question agreed to.

Orders of the Day — COMMITTEE OF PUBLIC ACCOUNTS

Ordered,
That Mr. Dafydd Wigley be discharged from the Committee of Public Accounts.—[Janet Anderson.]

Orders of the Day — Bypasses (North-east Hertfordshire)

Motion made, and Question proposed, That this House do now adjourn.—[Janet Anderson.]

Mr. Oliver Heald: I am glad to have the opportunity to raise the subject of bypasses for north-east Hertfordshire. My constituency contains the Letchworth garden city, small market towns such as Royston, Baldock and Buntingford, and many small villages. This debate is about heavy, noisy, polluting traffic that goes through the heart of two small market towns—Baldock and Royston—and four small villages—Thundridge, Wadesmill, Colliers End and High Cross, all of which are in my constituency.
The three road schemes that have been proposed would make a real difference to those communities. I shall deal first with Baldock. I have lived in Royston for some 16 years and have travelled almost every day to or through Baldock. As one goes down the hill, morning or evening, from Royston towards Baldock, there is an immense queue of traffic—lorries and cars streaming back from Baldock all the way to the dual carriageway some half a mile away.
The problem has been identified as a major traffic bottleneck for some 40 years. The A505 is an important road to my constituency, not only for those who live in the area but for those trying to do business in Royston, Letchworth and Baldock. The need for a bypass has long been recognised. Residents feel inconvenienced by the traffic, the delays interfere with commercial traffic and local people fear the pollution that it causes. The local pressure group, the Campaign against Continued Traffic Damage to Children, led by Mr. Gingell, has for years been asking for
fair, just and compassionate consideration to the health interests of Baldock children
who walk to school and live against a background of heavy traffic and pollution.
Since I was elected in 1992,I have been pressing for action. In 1995, we finally had a public inquiry, which led to the granting of planning permission and to the statutory orders that are now in place. The bypass project could therefore go ahead now if the money could be found. Hertfordshire county council considers this its first priority as a public-private partnership project, but feels that it needs help from the Government with the start-up costs for the project—the cost of the financial and legal experts to explore, negotiate and conclude the award of the contract. The cost is quite small—only £500,000 spread over three years.
I know that officials from the Minister's Department are in discussions with the Hertfordshire county council. My first plea to the Minister is this: after all those years of effort, now that we have reached the point where the road could be built, is it not possible to find £500,000, so that this public-private partnership of such high priority to Hertfordshire and to my constituency can go ahead? That is surely not such a large sum to resolve a huge problem for my constituents.
I notice the hon. Member for Stevenage (Barbara Follett) in her place. I imagine that that project would also help her constituents, many of whom travel to work in my constituency, just as many of my constituents travel to work in hers.
The second project concerns the A10. I notice in his place my hon. Friend the Member for Hertford and Stortford (Mr. Wells), who has campaigned for many years for the Wadesmill to Puckeridge bypass.
As one drives north on the A10 from Hertford, one goes through the dual carriageway at Ware and comes to a narrow section of single carriageway, which starts at Thundridge and passes through the centre of that village, Wadesmill, Colliers End and High Cross. This is a trunk road with a heavy toll of traffic.
Many of the inhabitants, including the elderly, children and the disabled, are effectively denied access on foot to other parts of the village because of the monstrous stream of heavy vehicles running through the middle of tiny villages. The accident record has always been bad on that stretch of road, but it is worsening, and the pressures will exacerbate the situation.
The traffic to Stansted airport is increasing. The passenger volumes proposed for Stansted are to increase from 5 million a year to 15 million a year. All that will have an effect on the narrow stretch of road that is one of the natural routes into London or across country from Stansted airport.

Mr. Bowen Wells: I am grateful to my hon. Friend for giving way. Does he accept that, in line with the Government's current policy of looking at the environmental damage caused by traffic congestion, the bypass, at modest cost, would bring enormous environmental advantages to the villages that would be bypassed by it, and thereby improve hugely the life of the children and others who live on the congested narrow A 10 passage between Wadesmill and Puckeridge?

Mr. Heald: My hon. Friend and Mr. Harry Tee, who has been leading the campaign for the bypass, have made that point at public meetings and had huge support from local residents, many of whom have petitioned on the matter for some years. Not only would there be an environmental benefit to the villages, but the route of the bypass would not create any environmental damage, because it would not go deep into the apron of the nearby countryside.
There are many listed buildings in east Hertfordshire along the road—homes right next to the road—and there are numerous awkward private accesses to the road. Road conditions that are already poor, with poor gradient, camber and visibility, have the additional problem of awkward accesses from private homes on to a major trunk road.
County Councillor David Beatty, who has been campaigning for some time, points out that pollution from the lorries is blown from the road into two primary schools at Thundridge and High Cross that abut the road. It is not satisfactory for that to continue. If the Minister drove up that road, as she may have done, she would see sign after sign on listed buildings and homes adjacent to the road saying "Bypass Now". That is the plea that I am making tonight.
The scheme has huge public support and full planning permission-all the statutory orders that it needs. It is ready to go. The county council is now suggesting, in conjunction with East Hertfordshire district council, that in terms of the Government's consultation document, "What role for trunk roads in England?", all the


significant criteria exist for a bypass to be built. In that context, I ask the Minister to give serious consideration to including the scheme in the trunk roads programme.
Finally, I turn to the matter of Royston, which is situated where the A10 and A505 roads meet. At the crossroads, the Roy stone—an ancient base for a cross which has been there since mediaeval times—gives the town its name. Although there is a bypass of the A505 from west to east, there is demand in Royston for a bypass of the A10, which would complete the traffic measures for that town.
At present, heavy traffic passes through the centre of Royston. The problem was studied by consultants for the Department of Transport and, in 1994, the Highways Agency announced that it had recommended that bypasses be built at both Royston. and Harston in the constituency of my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), who is in his place tonight. The then Minister decided not to proceed immediately, but agreed to meet me and County Councillor Doyle, District Councillor Smith and Town Mayor Kate Evans. We met John Watts on 26 October 1994 to press the case for a Royston south-east bypass. The Minister agreed to a package of improvements on the A10 south of Royston costing £200,000 and he promised to keep the case for a bypass under review.
I pay tribute to the Royston campaigners—particularly the late Peter Ratcliff—and ask the Minister for an assurance that the proposed Royston bypass will be kept under review. What are the prospects of the bypass going ahead under the Government's new regime? Heavy traffic pours down Melbourne road in Royston, which is used by children who attend the main schools in the town that are located on the other side of the A10. The hospital is also situated on the A10 and residents who wish to visit it must cross a stream of heavy traffic.
Those considerations—and the fact that heavy lorries have consistently knocked down the railings near the cinema in the centre of Royston together with other problems of that sort—have led to a demand for action. I ask the Minister to do a hat trick for north-east Hertfordshire and give the three schemes a fair wind.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): I congratulate the hon. Member for North-East Hertfordshire (Mr. Heald) on securing the debate and on his generosity not only in allowing an intervention from the hon. Member for Hertford and Stortford (Mr. Wells) but in highlighting the attendance in the Chamber of my hon. Friend the Member for Stevenage (Barbara Follett) and the hon. Member for South Cambridgeshire (Mr. Lansley). The number of hon. Members gathered for this Adjournment debate tonight clearly illustrates the importance of the topic that we are discussing.
The case put by the hon. Member for North-East Hertfordshire was not only eloquent and informed, but highlighted a problem in his constituency and the immediate area that I am sure he realises can be replicated throughout the United Kingdom. Concerns about safety, environmental pollution and the economic impact of traffic congestion affect everyone in the country. That is why the Government have embarked on the roads review and the consultation process and why we are committed to publishing next year a White Paper on which our integrated transport strategy will build.
Before I address the specific concerns raised this evening, it may be helpful if I define the overall thrust of our integrated transport policies and the stage that we have reached in the consultation process. Our consultation document on developing an integrated transport policy was published in August. We are aiming at a shift away from the fragmented provision of infrastructure and services to an integrated approach that will serve the country's needs for a strong economy, a sustainable environment and an inclusive society—all issues on which the hon. Gentleman touched in his opening remarks. Good communications are essential to that improved quality of life, but we must reduce our over-dependence on the car and the lorry if we are not to be choked by increasing pollution and gridlocked by increasing congestion. Our integrated transport policy consultations have received about 6,500 replies. We are analysing those responses and preparing for the publication of a White Paper next year.
We decided that our roads review should be conducted as openly as possible. In July, we published a two-volume consultation document entitled "What Role for Trunk Roads in England?", a document to which the hon. Gentleman referred. Volume 1 invited comments on general policy issues while volume 2 set out the position in each region and explained the schemes in the roads programme inherited from the previous Government. No schemes were included in the inherited programme as they had already been dropped. However, we have said that we are not ruling out schemes outside the inherited programme if they meet the five roads review criteria of integration, accessibility, safety, economy and the environment, and also rate a sufficiently high priority.
We intend that the output of the roads review should include, first, a short-term investment programme and, secondly, a programme of studies to consider the remaining problems, from which we shall develop the medium and longer-term investment programme.
To help us decide what should go into the short-term investment programme, we are developing a new appraisal framework that will enable us to see how far each proposal will tackle the problem in question, and how it will measure up against the five review criteria to which I have referred. We are not, need I say, anti-car. Indeed, we recognise that there are some problems to which road construction is the only answer. However, before we wish to sign up to new road building we wish to be clear that all other options have been considered, including public transport improvements, demand management and traffic management.
I have said that we had a good response to the consultation process. We organised consultation exercises on a regional basis to encourage debate in each area about the needs and priorities. This is much in line with our intention to strengthen the English regions and encourage partnership, co-ordination of programmes and local decision making. We do not want everything to be directed from London.
Our recent publication of the White Paper entitled "Building Partnerships for Prosperity", with its proposals for new regional development agencies, shows the direction in which we wish to move. The Government envisage that RDAs will influence the development of integrated transport strategies for each region. Their exact role will be considered further as part of our work on the integrated transport White Paper.
As part of the roads review consultation exercise for the eastern region, which includes the hon. Gentleman's constituency, the Government Office conducted two working sessions for local transport authorities, business and environmental interests at which every trunk road in the region was examined in detail. The results of that exercise were fed into a regional conference on integrated transport on 23 October, which was attended by more than 200 delegates. This process allowed plenty of time for delegates to contribute to the consultations following these events.
On 3 December, my noble Friend the Minister for roads invited all hon. Members from constituencies in the eastern region to hear a summary of the consultation results and to put their points direct to her. I know that the hon. Gentleman was unable to attend that meeting due to his duties as a Whip, but I hope that he will be able to attend the further meeting that has been arranged for 20 January. We regard it as important for Members to be able to make representations directly to the Minister. All these various strands of consultation will feed into our decision-making process.
The responses from the regional consultation indicate that local bypasses are generally popular and seen as valuable on environmental and safety grounds, which is a point that the hon. Gentleman made. Indeed, the eastern region office has received more than 300 letters about trunk road schemes in the region.
I move on to the specific issues to which the hon. Gentleman has referred. All remaining improvement schemes for the A I 0 were withdrawn from the programme in 1996. The Wadesmill, High Cross and Colliers End bypass had successfully cleared public inquiry so its removal from the programme caused no small consternation in all those communities along the A10 that would have benefited.
In the regional consultation, the argument for the reinstatement of the Wadesmill scheme accorded with the views that the hon. Gentleman expressed this evening. The regional consultation exercise has also considered which roads need to be managed nationally. One view was that the A10, lying between the A1 and M11, could be de-trunked and managed locally by Hertfordshire and Cambridgeshire county councils. Preliminary discussions were held some time ago between the Highways Agency and the county councils and some of the works identified are being put in hand. However, a decision on de-trunking will not be made in advance on the review. In the meantime, the planning protection for the A10 Wadesmill, High Cross and Colliers End bypass is being maintained.
No proposal for an A 10 Royston south-east bypass has featured in the trunk road programme, but I am aware than the hon. Gentleman and residents of Royston have pressed for the inclusion of such a scheme for some years. It would be impossible for any Royston bypass to be included in the short-term programme, as no preparatory work has been done. As I explained earlier, besides the short-term investment programme, our review will also propose corridor studies to bring forward strategies for longer-term development of the trunk road network.
At this stage in the consultation process, I am unable to give any indication as to the likelihood of either scheme featuring in the final programme, but I can assure the hon. Gentleman that his representations will receive the most careful consideration.
I will deal with the A505 Baldock bypass separately, as it is a local scheme being promoted, as the hon. Gentleman said, by Hertfordshire county council. It is not part of the trunk road review. The£33 million bypass was successfully taken through public inquiry in 1995, but it has not been started, as very few major schemes have been started in the past two years. In our guidance for this year's transport policies and programme submissions, we have warned local authorities that it is very unlikely that any major schemes will start construction in 1998–99. In Hertfordshire's latest TPP, the main works are shown to start in July 1999, but there is a considerable amount of archaeological investigation to do on site before construction work can start. There are also supplementary orders to progress.
In view of the difficulties in obtaining traditional funding, Hertfordshire has considered taking the project forward by using the local authority private finance initiative. Indeed, as the hon. Gentleman said, it has had preliminary discussions with my officials to explore the work that would be needed to promote such a project. As the hon. Gentleman pointed out, the council is concerned that it may have to invest considerably more resources in the project, in preparing a PFI contract, without any guarantee of success.
Generally, we do not fund scheme preparation, and grants become payable only in the year in which the works start. Therefore, we would not normally fund such preparation, but we have allocated a further £200 million for private finance transport schemes, and will consider again the difficulties that authorities have in funding the cost of contract preparation, and the uncertainty inherent in the process.
The Government's approach to projects where authorities seek a partnership with the private sector are clear. Over recent months, the Government have acted on their commitment to deliver on public-private partnerships in the local authority sector. We have taken three major steps. The new Local Government (Contracts) Act 1997 has removed legal barriers for authorities. The level of 1998–99 investment that we are prepared to back has been announced—at £500 million this is double the resources available this year. Last week, we announced the criteria for new streamlined procedures to give the private sector and local authorities greater assurance—at an earlier stage—that commercially viable projects that accord with Government priorities will secure support.
Government Departments, the, Treasury task force, the Local Government Association—through the public-private partnership programme, the 4Ps—and local authorities will work together in promoting projects that are high priority and viable propositions.
I am aware that, because it is new, authorities face different costs in developing project procurement cases using the design, build, finance and operate—DBFO—route. At present, this is still an expensive process because there are very few precedents. However, the costs will fall as the documentation and procedures become familiar.
For road schemes, my Department has released to the 4Ps the model contract used by the Highways Agency for eight DBFO roads. While this needs further work to fit the circumstances of local authority projects, it is still a substantial contribution to minimising the costs.
The hon. Gentleman asks that we should go further and give direct financial support to authorities for their initial costs. However, the Government must consider the case for any such support in the context of the many other bids that we receive from authorities each year.
Before the House rises for the recess, my right hon. Friend the Minister of Transport will announce the TPP settlement for 1998–99. I cannot prejudge the announcement now, but every year more worthwhile projects are submitted than can possibly be afforded. Authorities have already been warned that the available funding is likely to be tightly constrained.
I repeat that I am grateful to the hon. Gentleman for bringing these interesting matters to the attention of the House. I welcome the debate and the points made by the hon. Gentleman in support of bypass schemes in north-east Hertfordshire. I hope that he will be able to attend the meeting with my noble Friend the Minister for Roads in the new year to make a further contribution to the consultation process.
I know that the hon. Gentleman will realise that I am unable to give any of the assurances that he seeks about these schemes tonight as we are still in the middle of the consultation process, but I reassure him again that the proposals that he has put forward will be considered very carefully.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Eleven o ' clock.